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Big news over the weekend concerned OPEC+ delaying the return of Output reduction by one month and Crude bouncing also potentially on news of retaliation by Iran to attacks by Israel post the US Election. As daily WTI Crude (front month) futures charts show, the decline in October was likely a clear five-wave decline. Thus, while a minor bounce is underway, it likely won't prove too strong before another pullback down to new lows in December. Volatility has risen for Crude, but not unlike what's being seen in many assets ahead of the Election. Technicals for both C0.00% rude and Energy as a sector are negative into next year, and bounces should be seen as temporary before prices turn back lower. (CL-1.24% _F) XLE0.65%  OIH-0.24%

Following up on last night's discussion of Energy, reports are citing Israel saying that it won't target Iran's Oil facilities, which is resulting in C0.00% rude falling 5%. While oversold on an hourly basis, this drop is damaging technically as it's brought Crude down to the lowest levels since early October. The decline which began last week on 10/7 should kick off a decline down to 50 in WTI or lower, and Energy remains an underweight. Any oversold bounce to 73-74 would face solid resistance before a decline to test and break early October lows near 66 en-route to the 50's. I expect XLE0.65%  to begin to fall back down to test September lows near $83.

Lot of investors wondering if C0.00% rude is bottoming, and i do NOT feel this is the case technically, though i can make the case for another 2-4 days of gains back up to 73.45-74.50 before this peaks and goes back to the lows. Structurally this remains bearish, Elliott patterns suggest a good likelihood of $50 oil, DeMark exhaustion is not in place and cycles remain bearish until Summer 2025. Thus, while a short-term bounce is certainly underway for Energy as a sector as Geopolitical risk has elevated, i don't suspect this will prove long-lasting. Technically speaking, bounces would be used to Trim/take profits/hedge Energy as of early next week. (CL-1.24% _F) OIH-0.24%  XLE0.65%

American WTI Crude stockpiles rose by 3.7mm barrels last week, contrary to industry expectations of a draw. This supply combined with OPEC+ leaning towards increasing production in the months ahead is a bit of a concern on the Supply/Demand picture for Crude. The International Energy Agency (IEA) warned of a major surplus this decade as the world transitions away from Fossil fuels. While it's hard to say what the timetable of this will be, given that 2024 is an Election year, it would make sense that US production remains high to get Crude prices and Inflation lower ahead of the election (See today's PPI data which showed Energy as a particularly big reason for the miss) This current backwardation structure in WTI Crude (1 year WTI Futures curve shown in blue) should eventually start to lead to a bearish contango structure as front month starts to dip. XLE0.65%  is now the weakest of the 11 sectors, performance wise over the last month, down by -4.59%, more than double the negative performance of the next worst sector, Financials which is -2.44% (XLF-2.54% ) in rolling 1 month returns.

WTI Crude has quietly lost almost 7% off its peak in the last week, but nearing support, and the wave structure suggests a bottom this week and a push back to minor new highs. I'll discuss my projections for Energy and Crude in tonight's report, but this first pullback makes Crude and by extension, Energy, an attractive risk/reward, and i expect a push back to 96-98 in front month Crude FuturesCL-1.24% _FXLE0.65% OIH-0.24%