Daily Crude Oil Analsys

Crude Oil Analysis for Nov 2nd 2016

Analysis for Crude Oil day traders (What’s in store for Wednesday)

Nov 2nd 2016 Updated at 10:21 pm EDT on Nov 1st 2016

The American Petroleum Institute said earlier today that crude oil inventories last week surged 9.3 million barrels for the second straight weekly build under its estimates and well above market expectations. Gasoline inventories dropped 3.6 million barrels last week, while distillate fell 3.1 million barrels, a fourth straight drop. Cushing inventory recorded a build of 1.0 million barrels for the week. While the market from this past Thursday has been largely buoyed by OPEC concerns, the possibility that producers could walk away empty-handed from the November meeting looms large after Iraq, Iran, Nigeria and Libya all signaled they might not take part in the proposed production cut deal. Russia’s unclear stance is also fueling uncertainty.

Meanwhile, Asian shares stumbled in early trading Wednesday and the U.S. dollar on was on the defensive as signs that Republican U.S. presidential candidate Donald Trump could be closing the gap with his Democratic rival Hillary Clinton spooked investors. Anxiety in markets has deepened over a possible Trump victory given uncertainty on the Republican candidate’s stance on several issues including foreign policy, trade relations and immigrants, while Clinton is viewed as a candidate of the status quo.

Today’s Analysis & trade plan

Nov 2nd 2016 Updated at 10:21 pm EDT on Nov 1st 2016

For Tuesday Nov 1st, I’d written “In my opinion and after having analyzed the patterns and the news some more, it is still a bit outstretched to try being long here. Potentially, we could head lower from here to test firmer support at 46.25~46.15 (refer to Cam pivots from yesterday) and it may be worth covering your shorts here if you were still biased short in the post-close from earlier today.”. Well while we bottomed exactly at 46.20 during the intraday session, we are right about at this point in the Globex session with a low reading of 46.26.

WTI Crude is currently testing good support at 46.25~46.15 and this region is the key to overall direction for crude prices today as we unwind from oversold conditions. Way earlier last week, I’d pointed out when the price of Crude was around the upper $ 51 that we would test $ 46 within the week. Well here we are, if you’d taken a swing trade with just 1 contract based on that analysis, you’d have an additional $ 5,000 in your account today by simply holding that short for a few days! The power of technical analysis is not what I see nor do I have a crystal ball – it is merely levels on a chart that can be read if you know where to draw your levels. In my opinion, this area is worth trying long tonight or during the intraday tomorrow if we are revisiting this price area. For a stop, you would use the 50% retracement level I wrote about yesterday on the 3-month chart which sits at 45.71. A more conservative stop would be 45.80~45.85.  If we run it below 45.71 on decent volume on the EIA news day, we will head to tag the 10-month trend line support at 45.20~45.10 area and of course follow that up with the Fib .618 retracement at 44.17.

On the flip side, if we hold this initial support at 46.25~46.15, we will head initially to 46.55~46.65 then some decent resistance at 47.05~47.10. If EIA were to totally give you an opposite story from that of API which is entirely possible given API’s track record, we continue higher and then you would seek out a nice selling opportunity in the 47.50~47.60 area, with a stop above 47.90.

Cam Pivots for Nov 2nd, 2016

R3=47.90 | R2=47.37   R1=47.06 || S1=46.42  S2=46.11 | S3=45.58

Chart (WTI Daily Chart)



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