So at the open on the crude oil futures Sunday at 6 pm eastern, I expect price to gap up, but I wasn’t expecting a this mammoth of price gap…that was until I did a bit more research.
Brent crude surged the most on record and the WTI oil futures jumped almost $12 which was also a record, the biggest increase since futures started trading in 1988. And rightfully so, the drone attack took out 6% of the amount of oil consumed in the world each day.
The attach was so severe that Aramco, the Saudi Arabian Oil Company, could announce within the coming weeks that they won’t be unable to fulfill contracts on some international shipments.
Houthi rebels, backed by Iran are claiming the attack who have been at war with Saudi Arabia since 2015. The Houthi rebels have been behind a number of attacks on Saudi Arabia’s oil infrastructure and 1 or 2 more attacks like this and we could very well see oil hit the three digit mark.
So what’s else was behind this mammoth of a spike? I will give you a hint…@nealmcspadden talked about it the other day with Steemleo. In the futures markets, such as oil, there isn’t much trading taking place, the Smart Money is still sleeping. The trading taking place is very thin. During the regular trading session, the avg. volume is as much as 10X the avg volume during the overnight session.
So why did price stop where it did? Price hit a daily supply zone at $63.50. I originally didn’t mark it on my chart because the zone wasn’t fresh and had already reacted to sellers highlighted by the green circle. Thus, I wasn’t sure there were more unfilled seller orders there, but apparently there were.
Now I talked about price filling the gap in Part 1, but now I’m not so sure the gap will get filled sooner than later. I think the spike higher may have caught a lot of short sellers off guard and they will have to cover their shorts in the morning. Thus, in the morning I will be attentively watching the price action, but I don’t think there will be any trade set-ups to trade on Monday.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.