Speculators continue to goose this gas-bag whenever the release of phony inventory numbers suggests that the supply of crude has tightened. In fact, the fudge-factor for determining how much oil is ‘out there’ is so huge as to make swings of several million barrels statistically irrelevant. Many sovereign oil producers no longer even offer estimates; moreover, with skittish producers holding their cards closer than ever to their chests, it can no longer be reliably determined whether supertankers sitting low in the water are filled with oil or seawater. Thus, the absurdity of traders going nuts every time inventory data are released. This is exactly the way the Powers That Be want it. The banksters have lent heavily into the energy sector, and that is why we get a steady stream of planted news stories calculated to drive up prices. The most ridiculous of them are supply-side Rube Goldberg-esque think-pieces that would have us believe that the mere threat of oil cutbacks by the likes of Nigeria or Venezuela is sufficient to buoy prices even as the world, China in particular, skirts recession-or-worse.
The foregoing should not cause us to overlook a technical picture that is decidedly bullish. The chart shown projects to 50.51 (see inset), which would imply a 9% rally lies just ahead. Still, I’d need to see a decisive pop above the red line, a midpoint Hidden pivot resistance at 46.76, to be convinced the rally will fulfill its target. Even then, if crude were actually headed toward $60 a barrel, mid-August’s rally should not have failed by a measly 18 cents to clear July 7’s 49.53 top. That was chicken-hearted action, and it is why I regard any rally in crude as a dead-cat bounce._______ UPDATE (September 11): Sellers hit crude hard on Friday, but it didn’t change the bullish look of the intraday charts. The fact that the futures exceeded an external peak at 47.49 recorded on August 30 before they fell is bullish, since the impulse leg this generated makes the selloff corrective so far and therefore a possible buying opportunity. If the futures fall to the green line, that would trip a ‘mechanical’ buy signal, stop 42.99. In lieu of the nearly $3000 of implied entry risk per contract, however, I’d recommend that any bottom-fishing be done using a ‘camouflage’ or ‘counterintuitive’ tripwire. If you are unfamiliar with these tactics, stay tuned to the chat room for knowledgeable and timely guidance._______ UPDATE (September 14, 6:44 p.m.): The futures have come down hard since peaking last week at 47.58. The bullish impulse leg this generated remains intact, but it would be negated by a fall exceeding 43.00. A larger, bullish pattern would still be viable, but it too would succumb with a print exceeding August 11’s 41.85 low. All of this is shown in the chart, a new one. A chart going back to January would show that the presumptive dead-cat bounce in crude will have at least one life left unless the futures take out 33.28.