Daily Crude Oil Analsys

WTI Crude Oil Analysis for 1/10/17

WTI Crude intraday trade plan – Jan 10th 2017 Updated at 9:35 pm EST on Jan 9th 2017

For Crude Oil today I’d written:..”failure to beat resistance at 5400~54.10 targets 53.70 & initial support at 53.35~53.30 and digging any deeper below tests the best support for today at 52.85~52.80. Watch for a bounce from here if bulls are to keep control. In the event that selling is overwhelming and we break 52.60 on volume we could retest good support at the 52.16~52.10”. Crude actually collapsed in a straight path after vacillating around 52.60-52.70 for a long while straight down to 51.76 and closing at 51.96.

Gains are likely to be limited with initial resistance now sitting at 52.38 then secondary resistance a bit stronger at 52.70~52.80. A HOD print here is likely here and if you are shorting here – give your shorts about a 25 tick breathing space at or above 53.05 if you can afford it. In the event that you are mysteriously stopped-out the next target and resistance sits at 53.35~53.40 and a perfect area again for trying shorts. As always, use your profits from prior intraday trading determine your stops on such short trades!

WTI Crude has the most important support of the day 52.05~51.95. A break at the European market open below 51.75 therefore is a sell signal and targets initial support at 51.30~51.25. A bounce from here is possible as we become oversold short term, but longs could be risky and therefore I would suggest only long scalps on reversals at this point. If we fail to hold on to gains from small reversals on the downtrend expect 50.70~50.60 as LOD print. 

Pivots for Jan 10th, 2017

R3=53.04 | R2=52.53| R1=52.22 <-> S1=51.60 | S2=51.29 | S3=50.78

cl-weekly-1-10-2017-blog

Oversupply fears contributes to price slide – a WSJ story

Jan 10th 2017 Updated at 10:04 pm EST on Jan 9th 2017

U.S. oil prices took their largest losses in a month Monday with a wide slate of factors suggesting a glut of oil may not go away as quickly as some had bet.  Early losses came from fears of growing production coming from more rigs in the U.S., and from signs of an unrelenting wave of oil from Iraq and Iran. They accelerated throughout the day, with the specter of oil sales from the U.S. government and warmer weather forecasts pushing traders to sell out of oil bets that had become heavily skewed on rising prices, analysts said.  Light, sweet crude for February delivery settled down $2.03, or 3.8%, at $51.96 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, lost $2.16, or 3.8%, to $54.94 a barrel on ICE Futures Europe. Both snapped a three-session losing streak and fell to their lowest settlements in about three weeks. Monday’s losses were the worst by percentage since Nov. 29 and the largest loss by dollar value for any session since July.  Signs of steadily high supply coming out of Iraq and Iran are undermining faith in a deal to cut supply from the Organization of the Petroleum Exporting Countries and other global exporters, analysts and brokers said. The deal is supposed to cut global production by more than 1%, but many have noted these countries have frequently cheated output quotas in past deals.

There are signs Iranians are taking advantage of higher prices to sell more. The country’s floating storage has nearly halved since September, down to 17 million barrels from 32.5 million, according to ClipperData.  The firm also reports Iraqi exports going through the southern oil ports of Basra are at the highest in four years of tracking, just shy of 3.5 million barrels a day in January. Germany’s Commerzbank put out a note Monday citing Iraq’s December record-high crude exports of 3.5 million barrels a day from Basra as an example of the difficulties OPEC faces. Baghdad, however, has stressed that it will still be able to hit its 210,000-barrel-a-day limit this month. Traders had already moved their proportion of bets on higher prices to a two-year high in recent weeks. The OPEC deal was supposed to cut enough oil off the market to balance it, helping end a two-year supply glut.  But, with so many buyers already locked in, it makes it more likely that sellers will become the primary movers in the market and send prices sharply lower at times while traders have to wait for signs OPEC is following through, analysts said. That vulnerability hovered over the market Monday, said Ric Navy, senior vice president for energy futures at brokerage R.J. O’Brien & Associates LLC.  “It’s a confluence of factors,” Mr. Navy said. “The bottom line is there is still too much supply. That does not disappear.”  The U.S. government is in the process of selling oil from its strategic reserve, further pressure to send prices lower, analysts at Citigroup Inc. said late Monday. They also noted weather forecast updates that showed extremely mild temperatures for at least half the country deep into January, which is likely to suppress demand for heating fuels including diesel. Houston-based oil-field services company Baker Hughes said that drilling rigs in the U.S. had increased by four for the week ended Dec. 30. The uptick was the 10th straight week of rig-count growth and the U.S. now has the highest number of rigs in operation, at 529, since December 2015.

Stockpiles at Cushing, Okla., the delivery point for the benchmark U.S. West Texas Intermediate oil contract, are already near their all-time highs, raising fears storage will hit capacity, the Citi analysts said. More oil coming from an increase in U.S. rigs could perpetuate that oversupply.  Higher oil production from the U.S. is an expected byproduct of higher oil prices caused by OPEC’s decision on Nov. 30 last year to trim output to 32.5 million barrels a day.  Production data from major OPEC producers won’t be available until mid-February, leading most market watchers to predict prices will be more volatile than usual as snippets of information regarding the cuts are released by the media over the next six weeks.  As the market has to wait for data showing OPEC is following through, there is a chance traders are becoming more likely to sell, Jim Ritterbusch, president of energy-advisory firm Ritterbusch & Associates, said in a note. Monday was the first time U.S. oil prices settled outside a tight, $2 range since Dec. 15. “This still feels like a complex that has simply lost upside momentum,” Mr. Ritterbusch said. “Some fresh unexpected news may be required to revive the bull market.” Gasoline futures lost 3.9% to $1.5707 a gallon. Diesel futures fell 3.9% to $1.6376 a gallon. Both were their largest one-session declines since the summer.

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