Previous Week Capsule
The week was initiated on a cautious note as Energy Information Administration, which is responsible for reporting crude oil inventories reported a surge at 3,780 levels but extended its downside after the slippage in Purchasing Managers Index data to 52.6 levels reported by Institute of Supply Management, while the downside didn’t sustain long led by raising concerns over supply side as protests by anti-government threatened to disrupt the potential oil production. The counter started trading back and forth in a narrow range of 3,701-3,843 levels as slippage in Non-Farm Payrolls to 136K levels reported by Bureau of labor Statistics U.S. that signaled for lower jobs creation was neutralized by Russia’s commitment to curb the disruption in Saudi Armaco’s oil production.
As per the EIA Report, crude oil inventories reported a buildup of 3.100 million barrels last week. The greenback government reported that the U.S. stockpiles now stand at 432.202 million barrels on Sep 27.
Major Concern this week
No pause on increment in tariffs by U.S. President Donald Trump till any progress in bilateral trade negotiations of U.S.-China could place and continuation of protests from anti-government agencies in Iraq and Ecuador that could dampen the potential supply is likely to keep the black gold prices on edge.
API Forecast this week
As per the weekly American petroleum Institute (API) storage report a marginal increase by 4.100 million barrels is expected today to 436.302 million till October 04 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 2.190 million per barrels or plunge by 1.023 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 2.190 million per barrels making it a total stock piles of 434.392 million per barrel in reserves of U.S. government.
Weekly Trading Strategy
On daily scale, MCX Crude Oil has been bounced back after forming a ‘Double Bottom’ that signals for a reversal. Bollinger Bands have shown lower strength while the re-test of previous lows. Bollinger %B didn’t slip below one levels. RSI is sensing support at 40 levels. We are expecting a rebound in the prices of black gold if it breaches 3,850 levels to a high of 3,900 and 3,983 levels respectively.