WTI Crude intraday trade plan
Feb 8th 2017 Updated at 1:35 am EST on Feb 8th 2017
WTI Crude I’d written in my newsletter: Holding strong support at 53.00~52.90 (which is looking seemingly difficult here as I write). If we break lower, it would be time to reverse as it will be signaling the fact that we perhaps tag minor support at 52.35~52.25 and with good volume continue the slide then to 51.85~51.75. Failure below here establishes a trend lower and I would be looking for good support at 51.30~51.20 for profit taking on shorts.
Well, in the Globex session we conveniently tagged that 51.30~51.20 and if you held short in anticipation of the trend overnight it would’ve been nicely profitable. We are finally seeing some form of a trend in Crude!
WTI Crude tested that good support at 51.30~51.20 for profit taking by traders who remained short through the calls above 54.00. Ahead of the inventory news, we remain oversold short-term and therefore a nice little sympathy bounce is in order but this should offer another selling opportunity as the downtrend likely will continue after the EIA broadcast. We have held this support at 51.30~51.20 in the overnight session and likely that we target 51.75~51.80, and run this up perhaps as far as initial resistance at 52.00~52.10. On a very bullish EIA report gains are likely to be limited and it is my read that this could perhaps mark a HOD print. If bulls show up for the I’d look for a very painstaking grind to 52.25~52.30 and if we reach 52.40~52.50 use this as an initial entry down with wide stops.
A break below 51.20 targets the January’17 low in the 50.90~50.70 region. Although oversold in the short term with every possibility of continuance, for today this weak support may still hold the downside and counter-trending longs here in a downtrend appear a tad bit risky to me. If the bears elect to brush off this support level, we will target 50.50 and then look for that strong support at 50.30~50.20 for a short-term buying opportunity with stops below 30-40 ticks below.
Pivots for Feb 8th, 2017
R3=53.07 | R2=52.69| R1=52.47 <-> S1=52.01 | S2=51.79 | S3=51.41
WTI Daily Chart
API Data reads a massive crude build across the board: (a WSJ story)
Feb 8th 2017 Updated at 2:44 am EST on Feb 8th 2017
U.S. crude-oil stocks are expected to show an increase in data due Wednesday from the U.S. Energy Department, per a survey of analysts and traders by The Wall Street Journal. Estimates from 11 analysts and traders surveyed showed that U.S. oil inventories are projected to have increased by 2.5 million barrels, on average, in the week ended Feb. 3. The American Petroleum Institute, an industry group, said late Tuesday that its own data for the week showed a 14.2 million-barrel increase in crude supplies, a 2.9 million-barrel rise in gasoline stocks and a 1.4 million-barrel increase in distillate inventories, according to a market participant. Crude prices sold off for a second day Tuesday, weighed down by an appreciating dollar and concerns that U.S. government data due out Wednesday will show that oil and fuel inventories are still growing. U.S. crude futures fell 84 cents, or 1.58%, to $52.17 a barrel on the New York Mercantile Exchange. Brent, the global benchmark, fell 67 cents, or 1.2%, on ICE Futures Europe. The Wall Street Journal Dollar Index, which tracks the dollar against a basket of other currencies, was recently up 0.44%. Oil is priced in dollars and it becomes more expensive for holders of other currencies as the greenback appreciates. Oil investors are still weighing the likelihood that the Organization of the Petroleum Exporting Countries will bring supply and demand into balance against the prospects for increased production elsewhere and persistently high crude inventories in the U.S. Oil prices rose sharply after OPEC and other major producers agreed to cut output by almost 2% last November, but have rarely broken out of a narrow $52-to-$54 range since the start of the year.
“To some extent the bull case for oil is already priced to perfection,” said Bill O’Grady, chief market strategist at Confluence Investment Management. “You’re kind of assuming OPEC is going to do what it’s supposed to do and demand will hold up and you’ll be able to justify these prices.” Still, many investors are wagering that the rally isn’t over. They have piled into bets on rising oil prices in recent weeks, building record-high net bullish positions in Brent and U.S. crude futures. Some analysts have suggested that the big bets by speculative investors could make the market vulnerable to a cascading selloff. “Traders are betting on prices going up but they are impatient,” said Amrita Sen, the chief oil analyst at Energy Aspects. “They need to see the proof in the data, which might be a few months away.” If fully implemented, the deal could wipe out about 1.8 million barrels a day from the global daily supply and push the market into a supply shortage as early as the third quarter of 2017. So far, some early data has indicated that OPEC members have stuck more closely to their output quotas than many had anticipated. The U.S. Energy Information Administration said Tuesday that “global oil markets appear closer to balance than at any time in the recent past.” But investors remain wary of rising output from countries outside the deal, including the U.S., which could wipe out the gains made by OPEC’s supply action. U.S. drillers put 17 more oil rigs to work last week, according to oil-field services company Baker Hughes Inc., bringing the total to 583. In the short term, traders and analysts are eyeing the uptrend in U.S. oil drilling and stockpiling of crude and petroleum products. Analysts and traders surveyed by The Wall Street Journal forecast U.S. crude inventories rose by 2.5 million barrels in the most recent week, while gasoline stocks rose by 1.1 million barrels. “We’re coming to this reality that there’s a lot of oil supply in the U.S. and we’re heading into refining and maintenance season,” said Carl Larry, director of oil and gas at Frost & Sullivan. “We’re figuring out that regardless of what OPEC does, it’s not going to change the fact that we’re going to continue to build stocks here.” Analysts at Rittberbusch & Associates cited “a vastly oversupplied gasoline market as providing major downward pull on crude values.”
Gasoline futures hit their lowest level in two months, falling 2.28 cents to $1.4875 a gallon. Diesel futures fell 1.31 cents, or 0.8%, to $1.6221 a gallon. Official data from the Energy Information Administration is slated for release on Wednesday.