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NEW UPDATE: Modeled And Empirical Evidence Of A Likely Crude Oil Sell-Off In May

May 15 21:30

NEW UPDATE: Modeled And Empirical Evidence Of A Likely Crude Oil Sell-Off In May

  • Brent Oil pricing model is suggesting we are close to fair value (given current USD and C&LF net withdrawal levels)
  • The Brent time spreads frequently provide an early lead on spot oil changes. It had previously exploded to the upside presaging a sharp uptick in oil prices -- and they did.
  • However, the Brent time spreads had sharply reversed their course, and could fall some more. THIS IS NOT A GOOD SIGN.
  • Oil stocks at the Cushing hub are starting to grow again. The growth change rate leads oil prices by circa 2 weeks. The price of WTI oil should be negatively impacted soon.
  • Prepare for a crude oil top in the next few days, perhaps early in the May 16-22 week.
  • I believe a sharp upturn in the US Dollar will be primarily responsible for a crude oil peak (see last chart, below).

(1) BRENT OIL versus Brent Time Spread vs OIL PRICE IMPULSE MODEL

This is a live chart. Click on the link below to get an updated chart:

product.datastream.com/dscharting/gatewa...

(2) Cushing stocks are growing again -- Cushing stock changes lead WTI 1-2 spread, oil price changes by several weeks. This does not bode very well for a continuation of the current oil price rally.

This is a live chart. Click on the link below to get an updated chart:

product.datastream.com/dscharting/gatewa...

(3) The US Dollar has likely bottomed. It is should "test the low" during the May 16-22 week, but should resume its uptrend after a few days. A strong resumption of the uptrend will kill oil prices. A resurgence of USD strength could the primary reason for a reversal of crude oil prices soon.

This is a live chart. Click on the link below to get an updated chart:

product.datastream.com/dscharting/gatewa...

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.