Crude oil prices likely to ease off the recent highs – TDS

According to analysts at TD Securities, a noteworthy increase in CTA length has certainly contributed in placing a bid under the energy complex over the past week, but technical models are in flux as a range-bound market continues to create set-ups for sharp whipsaws.

Key Quotes

“Over the past 60d, the breadth of technical signals pointing long/short in WTI and Brent crudes has been tiled short, but price action currently suggests approximately +40% of technical signals from our proprietary TD ChartVision indicator are long. That being said, we can assert that trading momentum signals has been a loss-generating strategy across the energy complex over the last 60d, while trading mean-reversion has been very rewarding.”

“Currently, however, we note from our TD ChartVision indicator that both momentum and mean-reversion signals are in accordance and implying a short. This is also in line with our view that crude oil prices will ease off the recent highs in the coming weeks. Indeed, large surpluses in early 2020 still linger on the horizon, especially as OPEC+ will likely hesitate to deepen output cuts when they meet in December, which suggests this latest rally will likely run out of steam.”