Trade of the Week – Crude Oil

Trade of the Week – Crude Oil

Last week we had a bloodbath on the stock markets and I could have picked any of the major stock indices (DOW, FTSE, DAX. S&P, Nikkei) as the trade of the week.

They all collapsed and many of our traders made more money last week than they had in the previous 6 months.

However, this week I want to look at CRUDE OIL which is not getting much press at all considering what happened on the stock markets last week.

Crude Oil fell by over 10% last week. This was one of the biggest weekly falls in years.

The catalyst for the fall was twofold.

   1. A general sell off across the markets for riskier assets (stock markets being one) and oil joined this sell off party.

   2. A recent over production of oil globally which is pushing prices down. Only in the last week have the USA produced over 10 million barrels a day.

The price of a commodity like oil is determined by supply and demand. If there is an oversupply we will have less demand which correlates to a fall in the price.

From a technical perspective we can see a break of a major support zone on Wednesday which helped drive the momentum down further.

A very nice SELL trade for those who were tuned into what was happening on the charts and understood the drivers behind the sell-off.

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