Previous Week Capsule
It’s not an easy task to move forward after the OPEC’s dedication to stick to deeper cuts in the crude oil production without the contribution of Russia, being the second largest producer, keeping in mind that the second largest consumer of crude oil has posted a slippage in Manufacturing PMI data that stood at 49.3 in October, which has escalated the concerns over global demand. However, positive gestures from U.S. and China state representatives on signing of the ‘phase one’ deal were enough to revoke concerns over shrinkage in the economy and MCX Crude Oil surged sharply this week to a high of 4,074 levels. Although, market veterans are still betting that things will take time in their restoration as the shrinkage in economy will not curb overnight.
As per the EIA Report, crude oil inventories reported a slippage of 5.7 million barrels last week. The greenback government reported that the U.S. stockpiles now stand at 448.411 million barrels on Oct 25.
Major Concern this week
Supportive nomenclature from OPEC to curb the falling prices of crude oil will continue to provide cushion to the falling prices but unsupportive behavior from Russia to make any cut in their production could halt further rally. However, all eyes will remain on the headlines of Sino-U.S. trade deal as it will guide for further direction.
API Forecast this week
As per the weekly American petroleum Institute (API) storage report a marginal increase by 4.260 million barrels is expected today to 452.671 million till November 01 is reported by them that might push the black gold prices lower.
Advisorymandi’s Forecast (Time Series)
After incorporating the Three weeks and Five Weeks Exponential Time –Series Forecasting in the previous 11 weeks crude oil inventories data reported by Energy Information Administration, we are expecting that resulted stockpiles of crude oil could surge by 4.428 million per barrels or 3.862 million per barrels respectively. In order to filter the time period, we have employed a Root Mean Square Error method (RMSE), which is pointing out for Three Weeks Exponential Time Series Forecast, according to which, the Crude Oil Inventories is expected to plunge by 4.428 million per barrels making it a total stock piles of 452.839 million per barrel in reserves of U.S. government till Nov 01.
Intraday Trading Strategy
On daily scale, MCX Crude Oil is trading in a ‘Rising Channel’ that signals for continuation of consolidated move with a positive bias. The black gold is holding its 30 days Simple Moving Average. RSI is trading near 60 levels and expected to extend after its breach. Stochastic oscillator is hinting for continuation of bullish momentum.
We are expecting a breach of 4,080 levels will trigger the formation of ‘Spinning Top’ on daily scale and activate more buyers to a high of 4,105 and 4,173 levels respectively.