WTI may break higher as storms limit crude processing
Fawad Razaqzada September 7, 2017 12:48 PM
US oil production facilities haven't fully recovered from Hurricane Harvey and now the even more powerful Hurricane Irma is set to reach the Gulf of Mexico in the next couple of days, and another one, Jose, is brewing in Atlantic.
US oil production facilities haven't fully recovered from Hurricane Harvey and now the even more powerful Hurricane Irma is set to reach the Gulf of Mexico in the next couple of days, and another one, Jose, is brewing in Atlantic. Any further disruptions in oil and gas production could further extend the rally in energy prices or at minimum keep prices bid until the threat of tropical storms dissipate. Indeed, last week saw refiners process less crude as Hurricane Harvey hit Texas and Louisiana. As energy industry operations shut down, crude oil stockpiles rose by a good 4.6 million barrels according to the latest Energy Information Administration’s weekly supply data. Because of reduced processing of crude oil, inventories of gasoline and diesel fell. This is hardly surprising. It will be interesting to see how the supply situation in the US evolves over the coming days and weeks. We expect to see more of the same, though it won’t have any long-term impact on oil prices. In the short-term oil prices should remain supported.
As a result of the oil price upsurge, WTI is now finding itself at a good $49.15 per barrel. It is thus testing the lower bound of the key $49.10 to $50.40 resistance range. Here, a bearish trend line converges with the 200-day moving average and the 61.8% Fibonacci retracement level against this year’s high hit in January. The top of the range marks the last swing high, which means a pool of liquidity will be resting above this area i.e. buy stop orders from the existing sellers, and buy stop orders from breakout bullish speculators. The cluster of resting buy orders may attract the price of WTI towards it, leading to a bullish breakout soon. If that potential breakout holds, things could then become rather interesting. Otherwise, expect choppy price action. Meanwhile if support at $48.70 gives way first then there is a possibility for a pullback towards the last broken resistance at $47.60/5 area.
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.