Crude up for fifth day ahead of US oil inventories
Fawad Razaqzada June 28, 2017 9:06 AM
Believe it or not, crude oil is actually up for the fifth consecutive day now. Despite on-going bearish news flow and downbeat sentiment, oil prices appear stable ahead of the official US weekly crude inventories data from the Energy Information Administration (EIA) later this afternoon
Believe it or not, crude oil is actually up for the fifth consecutive day now. Despite on-going bearish news flow and downbeat sentiment, oil prices appear stable ahead of the official US weekly crude inventories data from the Energy Information Administration (EIA) later this afternoon. Last night, the American Petroleum Institute (API) reported a surprise build of nearly 0.9 million barrels in oil inventories, and said stocks of gasoline rose by 1.4 million barrels. The market had been expecting a reduction to the tune of 2.2 million barrels in the headline figure. Nevertheless oil prices were able to quickly recover from small declines. Oil market participants clearly didn’t believe the API stats were accurate. Who would blame them? The API data have over- or under-estimated the official EIA estimates by big margins in recent weeks. But if the EIA were to confirm the oil inventory build then oil prices may halt their recovery process.
It is worth remembering that crude oil has been stuck in a wide range for over a year, as speculators weigh the impact of OPEC's efforts to reduce global oil inventories against rising US shale supply. With crude falling near the lower end of the range in recent week, prices have again rebound. As have been reported by both the CFTC and ICE, net long positions from record levels have been trimmed sharply in recent weeks as bearish speculator expanded their short positions. These market participants may have taken profit on their short positions at these lower levels in the past several days. The latest positioning data from CFTC, due for release on Friday, may confirm this by revealing a modest rise in net long positions.
From a technical perspective, WTI’s ability to reclaim the broken swing points at $42.23 and £43.80 is bullish as it shows the sellers failed to hold their ground at these battle grounds. Does it mean prices will go up now? No, not necessarily. But what it does mean is that the sellers are finding increasingly less reasons to maintain their bearish positions as more and more resistance levels break down. At the time of this writing, WTI was testing another resistance area between $44.20 and $44.65. A potential break above here would be a further bullish development. As far as the sellers are concerned, well they want to see clear weakness in oil prices again now. For them, it would help if WTI were to break some key short-term support levels, like $43.80, ideally on a daily closing basis.
Source: eSignal and FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.