OPEC’s global pact of curbing oil supply has worked, and oil prices have been in a bull run for almost a year now. Whilst Saudi Arabia is leading the call to maintain the restrictions on supply, Russia is pushing for an end to the deal which they feel has created a market which is now over-heated.

The market has reached a three year high, and we are now in territory not seen since November 2014. As the chart below shows, the last time we were at the price, it was as oil prices were declining sharply.

The chart below shows WTI crude oil prices dating back to mid-2015. The Blue and Grey histogram is the volume-at-price throughout this period. The pink line within the histogram is the Volume Point of Control (VPOC), which is the most heavily traded price at around $49.

The low volume area, in November 2014, has been highlighted on the chart. This is were the market has sold off rapidly, and hence there was comparatively little trading volume. As we re-enter this low volume area, we would expect the market to move up through it relatively swiftly, with a target of around $73.

About the author

Trading and Investment

Traded the markets for over 15 years, including Commodities, Bonds, Currencies, Equities, and Indices. I have also worked as a Chartered Financial Planner.
CeMAP, CeFA, DipFA, AdvDipFA, Ba(Hons) Economics, Chartered ALIBF

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