Key Crude Oil Price Break a Durable Trend Change Going into Doha?

Key Crude Oil Price Break a Durable Trend Change Going into Doha?

14 April 2016, 07:48
Mohammad Soubra

Talking Points

  • US Oil prices Tuesday rose above the 200-day SMA for the first time since July 29, 2014
  • Crude volatility, volume, open interest and options activity signal extraordinary interest
  • Fundamentals in supply-demand are key, including the Doha meeting scheduled April 17

See the DailyFX Analysts' 2Q forecast for US Oil along with their favorite 2016 trading opportunities onthe DailyFX Trading Guides page.

Oil spot prices this week closed above the 200-day moving average for the first time in 445 trading days – breaking a record ‘bear trend’. Is this the cue for a systemic trend change? Crude has risen more than 15 percent since hitting its February lows, but the pressure of the incredible bear trend over the past two years requires considerable conviction to overturn. A shift in the bulging supply-demand imbalance will be crucial to deciding the market’s winds. Rumor and conjecture of an OPEC and non-OPEC agreement to curb production at this weekend’s Doha meeting (specifically Sunday, April 17). No agreement will likely delay bulls’ recovery.

As we keep a vigilant eye on the fundamental swells, it is also important to keep track of the market’s price bearings, sentiment and positioning. This article will focus more on the price and exposure aspects.

A Critical Technical Move

Oil prices have held to a general bear trend since mid-2014 with critical bouts of exceptional selling momentum. Throughout that drive, the market has been held under the moving water mark in the 200-day moving average throughout. With the tentative recovery beginning after the 7-year low set on February 11, the market overtook the 50-day moving average on February 22 and quickly followed on the 100-day moving average on March 7. The break for the higher time frame average called an end to the longest stretch of relative market weakness on record. The charts below show how remarkable this development is visually.







Share it with friends: