Crude Oil on Tuesday 16th May 2017, Crude Oil March futures prices Up by 23 pts (0.83%) closed at 3123, trading range between 3115-3164 On the New York, Mercantile Exchange, Crude oil for February delivery on the New York Mercantile Exchange to settle at $48.66 a barrel.
Crude Oil inventories rose 882,000 barrels at the end of last week, the American Petroleum Institute (API) said on Tuesday, compared to a decline of 2.3 million barrels seen and last week’s figure that showed 5.789 million barrels decline.
The API estimates are followed by official figures from the Energy Information Administration on Wednesday.
Distillate stocks gained 1.79 million barrels and gasoline supplies fell 1.78 million barrels. Supplies at Cushing, Oklahoma, fell by 540,000 barrels.
Analysts expected 1.050 million barrels decline in distillates and an 731,000 barrels’ dip in gasoline supplies.
OPEC Meeting Scheduled
OPEC is meeting in Vienna on May 25th to discuss the extension, and analysts seem to be unanimously agreed that it will approve the extension. Several cartel members have already declared their support for the extension, including exempt Iran and Nigeria, Russia, Saudi Arabia as well as Iraq and Kuwait.
Traders may note today’s economic event
1. Crude Oil Inventories (GMT 20:00 LOCAL 8:00 PM)
The EIA is to release weekly data on oil and gasoline stockpiles.
DATA FORECAST -2.360M PREVIOUS -5.247M
2. Gasoline Inventories (GMT 20:00 LOCAL 8:00 PM)
DATA FORECAST -0.731 M PREVIOUS 0.150M
If the increase in crude inventories is more than expected, it implies weaker demand and is bearish for crude prices. The same can be said if a decline in inventories is less than expected.
If the increase in crude is less than expected, it implies greater demand and is bullish for crude prices. The same can be said if a decline in inventories is more than expected.
Crude oil prices attempted to move higher but were unable to break through Monday’s highs at 3185, and profit taking took its toll ahead of Tuesday report from the American Petroleum Institute on Inventories.
We blindly recommended buying around 3050, for the reason that “Falling Wedge Pattern” was formed, which is bad and the good news that followed was that the reaction led to up movement of prices only.
New formation has evolved as a “Rising Wedge Pattern”. In this pattern, the current uptrend continues to rise to 3240-3300 level upside and the rally is expected to move to 3300 level.
Today, it is possible to break below 3100 level and then the downside is expected to reach 3080-3060 level. We should take long entry around the prices which will react as a strong support at 3050.
Once the above mentioned takes place, then it is possible for the crude oil to bounce back to 3100 level and eventually to 3150 level again.
Market is expected to take strong support with bullish pressure and a continuous up movement is expected to 3300-3400 range.
We will probably need to consolidate a bit before the market makes its next move. As a result, we predict short-term trading in a back and forth manner. This will probably be the best strategy in the next few trading sessions.
Research Report call:
Crude Oil Buy on dips at 3080-3070 Target 3100-3130 Stop loss at 3050.
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