From the middle of 2014 to early 2016, WTI fell almost 75%. Oil inventories were very high because of overproduction as shale sources increasingly came on-line. OPEC did not cut output at this time to try to squeeze the small US frackers whose profit margin was destroyed in the meltdown. At the end of 2015, crude oil export was legalized and the price rebounded for almost 3 years driven by a booming US economy. In the Fall of 2018, another market swoon hit as threat of a US economic slowdown materialized and again supplies were high due to shale production. But this time, OPEC did initiate production cuts effective January 2019, yet the US (now the world's largest crude exporter) and Brazil continued to increase production.
Oil and equities have traded with a high direct correlation since the October top, and even on this rebound since December 26th.
CL tested the upper (20,2) Bollinger band 2 days ago, and price is pinned between the 20-sma and this upper band. IV continues to drift lower, not showing signs of range breakout yet. This past Monday, CL fell precipitously at key times after 8am which suggests commercial seller distribution, but today the market was supported by EIA. I don't have a feel for the breakout direction, but do believe that a topping equities very soon (next few days) will lead to significant downside in both markets.
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