Daily Crude Oil Analsys

WTI Trade plan for 1/11/2017

WTI Crude intraday trade plan – Jan 11th 2017 Updated at 9:10 pm EST on Jan 10th 2017

For Crude Oil today I’d written:..” Gains are likely to be limited with first resistance at 52.38 (We topped exactly at this point)…the most important support of the day 5205/5195. A break below 51.75 therefore is a sell signal & targets support at 5130/25. A bounce from here is possible as we become oversold short term, but longs could be risky. If we fail to hold on to gains from small reversals on the downtrend expect 50.70~50.60 as LOD print”.

We broke 5205/5195 for a sell signal and we bottomed only 1 tick from the lower target of 50.70!

The API inventory news appears to be on the bearish side especially given all the commotion in the Crude market related to OPEC oversupply. The API numbers released after close was as follows:

CRUDE +1.53mb | GASOLINE +1.69mb | DISTILLATES +5.48mb | CUSHING -0.187mb

WTI Crude shorts on a break below 52.05~51.95 worked perfectly with 50.70 target hit. We are oversold so a small recovery is possible tomorrow morning but gains are likely to be limited. Initial resistance at 51.25~51.30 but above 51.55 we will be targeting 51.80 perhaps and as far as 52.10.

Eventually the downtrend is likely to resume targeting 50.10. If we continued lower, look for 49.60 initially then 49.20 and perhaps as far as very good support at 48.90~48.80 for profit taking on all shorts. 

Pivots for Jan 11th, 2017

R3=52.31 | R2=51.64| R1=51.23 <-> S1=50.41 | S2=50.00 | S3=49.33

WTI Daily Chart


OPEC output increases stun Oil markets – a WSJ story

Jan 11th 2017 Updated at 9:19 pm EST on Jan 10th 2017

Oil prices sank to a one-month low Tuesday with investors still questioning the impact of an OPEC deal to cut production that had originally sent prices to 18-month highs. The Wall Street Journal reported early Tuesday that Libya, exempted from production cuts, had more than tripled its crude output in the past six months. Data in recent days also showed growing exports from Iran and Iraq, which has made investors nervous that a plan for output cuts from the Organization of the Petroleum Exporting Countries may not be enough to end two years of oversupply.  Light, sweet crude for February delivery lost $1.14, or 2.2%, at $50.82 a barrel on the New York Mercantile Exchange. Brent crude, the global benchmark, lost $1.30, or 2.4%, to $53.64 a barrel on ICE Futures Europe. Both have lost about 6% in just two sessions, their largest such declines since the summer.  OPEC members and several other big global exporters agreed last month to cut output by nearly 1.8 million barrels a day in total, more than 1% of global supply. However, some countries, including Libya and Iran, were given exemptions because of civil conflicts or economic considerations. Iraq was allowed to cut by just a relatively small amount, and then government officials laid plans to increase exports anyway.  The Journal reported Tuesday that Libyan militias that once kept oil fields and ports closed have instead struck deals that allowed the National Oil Co., or NOC, to raise production to a three-year high of 708,000 barrels a day this week, an NOC spokesman said. It had been just 200,000 barrels a day last year, but now NOC believes it could hit 900,000 barrels a day in 2017.

Iran has likely sold oil it had been holding in storage. ClipperData had said Monday that Iranian floating storage was down to 17 million barrels from 32.5 million. The firm also reported 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.  “It’s just incredible how much” production is still coming, said Tariq Zahir, who oversees $8 million as managing member of Tyche Capital Advisors LLC. “All of these cuts could be negated just by Libyan production.”  Oil had posted gains earlier during Asian and European trading, likely from bearish investors cashing out winning bets, analysts and brokers said. Monday’s trade brought oil’s largest losses in a month with a slate of factors — including Iraqi and Iranian exports — reviving concern about a glut of oil that has halved prices from highs above $100 a barrel back in 2014.  The OPEC deal to cut output had sparked a rebound throughout most of last year. By its end, money managers moved to hold seven bullish positions for every one bearish position on oil prices, according to regulatory data.  That kind of heavy favor for one side of a trade can often lead to a sharp reversal, and many say that has accelerated the selloff to start this week. With so many buyers already locked in, it makes it more likely that sellers become the primary movers in the market. Without more big bullish news, money managers may start bailing from their bullish positions, sparking others to do the same, a cascading effect that overwhelms the market with sellers.  “There’s a lack of new information that’s bullish,” said Scott Shelton, broker at ICAP PLC. “The Iraqis are selling more oil than they’re supposed to. There are signs the Iranians have sold a lot of extra oil.”

The chance of bullish news coming soon may also be sparse, analysts said. Some have said it could be weeks or months before it becomes clear that the OPEC cuts — which are supposed to start now — are indeed happening and are large enough to reduce record-high storage levels. Until then, drips of news like the increasing production out of Iraq and Iran make selling more likely than buying, analysts said.  U.S. crude inventories are also making traders bearish. They likely rose by 1.8 million barrels in the week ended Jan. 6, according to a survey of analysts by S&P Global Platts. Citigroup also estimates gasoline stocks grew by 1.25 million barrels in the same week while distillate stocks shrunk by only 130,000 barrels.  Official data from the Energy Information Administration will be released on Wednesday.  The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 1.5- million-barrel increase in crude supplies, a 1.7-million-barrel rise in gasoline stocks and a 5.5-million-barrel increase in distillate inventories, according to a market participant.  All the oil in the U.S. and coming even still from OPEC members like Iraq is a reminder that the market is still mired in surplus despite efforts to reduce the overhang.

“This doesn’t mean that the market won’t rebalance in 2017, but it does suggest that it may not happen to the extent or on the schedule that the bulls would prefer,” said Tim Evans, a Citi Futures analyst.  Gasoline futures lost 1.5% to $1.5467 a gallon, its sixth loss in seven sessions. Diesel futures fell 1.6% to $ 1.6114 a gallon, now down 5.4% in back-to-back losing sessions. Below is the analyst estimates:



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