Oil prices have been supported on a variety of factors over the last few weeks. Low inventories (there was another surprise draw last week), rising demand, increased expectations by the IEA of further demand, and a sharp rise in global vaccination rates have all been supportive.

However, for reasons that are not entirely clear, oil does tend to have a period of weakness from now until the start of December. Is this a perfect time to look for a short term pullback in oil?

Over the last 21 years, WTI crude has fallen 12 times between October 27 and December 17. The average loss has been -5.69%. The largest gain was +21.16% in 2020 in an unusual market and the largest loss was -32.92% in 2008.

Major Trade Risks: The main risk to this trade is of oil resuming its dominant medium-term buy bias. In particular, look out for buyers stepping in at key support at $77.


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High Risk Investment Warning: Contracts for Difference (‘CFDs’) are complex financial products that are traded on margin. Trading CFDs carries a high degree of risk. It is possible to lose all your capital. These products may not be suitable for everyone and you should ensure that you understand the risks involved. Seek independent expert advice if necessary and speculate only with funds that you can afford to lose. Please think carefully whether such trading suits you, taking into consideration all the relevant circumstances as well as your personal resources. We do not recommend clients posting their entire account balance to meet margin requirements. Clients can minimise their level of exposure by requesting a change in leverage limit. For more information please refer to HYCM’s Risk Disclosure.

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