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Expect Crude Oil Pits to Heat Up

Carley Garner

We've been patiently waiting for meaningful price action in crude oil, but the market has yet to deliver.  Nonetheless, crude rarely stays boring for long; this market is well overdue for some excitement. 

In our opinion, the nearly non-existent volatility has enabled stop loss order to accumulate on both sides of the market.  However, our models suggest the odds favor a running of the sell stop orders.  If we are right, the election of stops which are likely placed under $85.00 per barrel, could lead to a water-shed move into the mid-to-high $70.00s. 

Seasonals suggest that such a flush would be an opportunity for the bulls.  If we are wrong about the initial price break to the downside, the bulls will need to see prices trade above $90 to get the volatility moving in the other direction. 

Crude Oil

Market: Soybeans, ECL_f, GCL, CL

Crude Oil

Range: Stagnant trade has likely enabled stop order accumulation below $85.00, if these orders are elected, stop running could quickly bring prices into mid-to-high $70s.