United States with 9% oil production growth - opportunity for shorts of CLX7

The oil rally hesitated as investors again took into account the shale industry, which has seriously undermined prices in recent months. Government data released earlier on September 28, 2017 show that US drilling has increased production by 9 percent over the past three weeks. This is the biggest three-week increase in 5 years.

This is only one thing to compensate for OPEC's abridged extraction with producer countries outside the organization. The news comes at a very convenient time when the price is at key technical levels and this gives us a good opportunity for short positions. If the report of Baker Huges later today (20:00 Bulgarian time) shows a growth of shale platforms, then the black gold foundation will again turn to negative.

Until yesterday, all bulls traded the intentions of OPEC and Russia, which are making enormous efforts to reduce global yield, but today things are different and we are very likely to observe the next turn. Knowledgeable people with shale oil technology share an opinion and it is that the US, even if it does not increase the number of shale platforms, can again cover all efforts made by OPEC and Russia.

Technical analysis and our expectations:
The price is in broad medium-term consolidation, reaching levels of long-term diagonal resistance. We have a breakthrough on a medium-term upward channel with a second test. The area around $ 51.60 and $ 52.60, formed by the long and medium-term diagonal, has a strong impact and the price is making a strong impulse down - a heavily negative signal. Here's the big picture:

50SMA below 200SMA - Negative for the price
Dem14 - in an overproduction zone
Sequential marks the 9th - end of the rising impulse - a negative signal for the price.

Alternative Scenario: If the price can rise above the resistance zone, the negative scenario will be spoiled and we are more likely to see growth.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

Read more:

• Oil fundamental and inertia can push prices to new highs
• Goldman Sachs: “Gold is a better hedge than oil in current market conditions”
• Golden years for Gold
• The end-of-year gold rally continues at full speed
• Gold goes over $ 1,500, big players with estimates for the next year