Previous Week Capsule
The week initiated on a cautious note as the slippage in Non-Farm Payrolls to 130K levels reported by Bureau of labor Statistics U.S. that signaled for lower jobs creation after the GDP started deteriorating was outperforming the upbeat tone brought by de-escalation of tariff war between Sino-U.S in lieu of which traders started building their long positions aggressively on the tentative talks in October and drawdown in crude stock piles held by U.S. firms which were supported by OPEC led supply cuts to curb the slowdown in overall demand but the black gold got charged this week after an uptick in China’s crude oil imports in August reported by General Administration of Customs that pushed the MCX Crude Oil prices above the psychological resistance of 4,100 levels.
As per the EIA Report, crude oil inventories reported a buildup of 4.771 million barrels last week. The greenback government reported that the U.S. stockpiles now stand at 432.556 million barrels on August 30.
Major Concern this week
The upbeat tone from potential U.S.-China trade talks to negotiate the taxes levied on each other tentative in October and supportive nomenclature from OPEC to curb the falling prices has been factored in by the market participants. The black gold is holding up on extension of trade talks that will counter the demand slowdown else exhaustion in the uptrend cannot be ruled out.
API and Forecast this week
As per the weekly American petroleum Institute (API) storage report a marginal increase by 7.227 million barrels is expected today to 425.329 million till August 05 is reported by them that might push the black gold prices higher.
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 fall either by 5.833 million per barrels and 2.707 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 5.833 million per barrels making it a total stock piles of 426.723 million per barrel in reserves of U.S. government.
Intraday Trading Strategy
On 4-hour scale, MCX Crude Oil is trading above the potential demand zone that is placed in a range of 4,091-4,121 levels. The black gold is trading above the magic wand of 89 (High-Low) Simple Moving Average, which signals that an uptrend is intact. RSI is sensing support from 60 levels showing no signs of divergence and oversold.
Traders are advised to capitalize every opportunity to ‘Buy on Dips’ for an upside of 4,200 and 4,222 levels.