FxWirePro: Who all are contributing to crude's inventories? Inventory analysis and hedging perspectives

A glimpse at OPEC developments: Of-late the Venezuelan crisis and Russia fulfilling its OPEC+ agreement that has been offset by President Trump tweeting that 'oil prices are getting too high' and 'OPEC should relax'. 

OPEC likely to keep curbing its production through H2’2019, Saudi Arabia’s oil minister stated on Wednesday, shrugging-off the Trump’s objections in the administration to stimulating oil.

A troop of 14 oil producers from the OPEC and 10 league nations, led by Russia, entered into a pact to carry out the curbs. This move has caused almost 25% spike in crude prices, which in turn caused apprehensions of President Trump as he perceives this as a threat to the global economy.

Chevron effect: Chevron reckons to considerably increase production levels in the oilfield at the heart of the American fracking boom, as per the reports of WSJ.

Chevron forecasts its production to multiply, plans to double or even more than that in the years to come in Permian Basin in Texas and New Mexico to 900,000 barrels of oil and gas, that’s approximately 40% increase from its previous projections.

The company’s strategy is to hold onto its position in the Permian region and their land is now recognized as having unrivaled value, its shale portfolio is worth more than $70 billion, the largest of any operators.

Ahead of today’s US EIA’s inventory reports on crude, WTI crude bears seem to have been resumed.

WTI crude oil’s bullish price sentiments are somewhat exhausted after a strong rise through most of February. As a result, WTI CFDs has spiked about 6.02%.

The EIA’s previous levels showed that crude oil production reached 12 million barrels per day (mbpd) for the first time last week. Crude oil output has dipped to -8.6 mbpd from previous 3.7 mbpd, while consensus was about 2.8 mbpd.

Trading Recommendations:

Contemplating above fundamental factors, anybody on this planet can guess this rationale that when supply increases/decreases with the increasing/decreasing demand forecasted, then correspondingly, the price of the commodity tends to either shoot up or tumble. Hence, contemplating technical rationale, we’ve advocated initiating longs in NYMEX WTI June 2019 and short NYMEX WTI December 2019 spread on hedging grounds at - $1.19/bbl in the recent past, with the target of +$2/bbl and stop loss of -$2/bbl.

Alternatively, stay long in NYMEX WTI June 2019 and short in ICE Brent June 2019 at -$7.97/bbl. The target of -$5/bbl and stop loss of -$9/bbl. Marked to market on 07 Feb at -$7.91/bbl for a profit of $0.10/bbl. Courtesy: JPM

Currency Strength Index: FxWirePro's hourly EUR spot index is inching towards -2 levels (which is absolutely neutral), while hourly USD spot index was at 116 (highly bullish) while articulating (at 12:04 GMT). 

For more details on the index, please refer below weblink: http://www.fxwirepro.com/currencyindex