Crude oil pierced bottom of $65 eventually.

2018.11.4
Crude oil Future (the most traded)
Closed at $62.86 (-1.07%) Target to $50 (-21.5%)
Indices
S&P500 2,723.06 (+1.06%)
10y US T-Note 3.2121% (+0.0818%)
ICE Brent $72.83 (-0.08%)
Dollar Index 96.542 (+0.26%)

1. Crude Oil went below $65 eventually. The worry of short supply was solved eventually. I believe that It was too estimated from first, and the breaking $65 means the start of another plunge, targeting to $50. There have been three signals about it: oil majors’ hesitation about increasing investment, comments from dealers of real and US oil stock which have hadn’t consistent movement. Recent plunges of global stock markets and concerns for slowing Chinese real economy have been causes too.

2. Rising interest rate will be harmful to oil. Even though US market yields have decreased again with plunging stock markets, I believe the rates are going up again recovery of the markets. My target for yield of 10y US T-Note is still 3.50%. Actually, liquidities in the market are full yet. Fed is decreasing their balance sheets, but the balance sheets are still more than $4tn, and ECB and BOJ don’t end buying yet. Even if they end their polies, their re-investment will be continued for a while. It’s obvious that strong buyers in the markets are hugely decreasing their amount of buy orders, but the market have enough capacities to handle the shock, like it had at early 2000s. But impact of concerns about it is inevitable, and oil will be first target for the impact. Skyrocketing of oil until early October, has been boosted by a bunch of hedge funds, not real demanders. The oil market is totally different from S&P500 supported by performance of Corporate US. With three signals at above 1, fundamentals of oil aren’t good, and it entered into bear market already.

3. Shale revolution is still valid, and oil will be going to $50. Lastly, shale revolution is still valid, with oil majors increasing the investment for the shale. I believe oil will reach below $60 in this year, and touch $50, not later than Jun, 2019. Looks like Exxon Mobil is going to wrong direction.

Mr. Banker, http://markety.tistory.com