September Crude Oil broke down and tested support on Wednesday, July 27, 2016, trading down to 41.68 which is just above the 50 WMA now at 41.62. Crude oil bounced off this level, trading up to 42.19 and ended the day at 41.91. Settlement was at 41.92. The US session started with traders bidding up the September contract to the high of the day at 43.20 as traders hoped for a bullish EIA report.
This would have been a rebuke of the API numbers and could have created some panic buying from shorts. This didn’t happen. The EIA report showed Crude inventories increasing by 1.67 million barrels and Cushing inventories going up by 1.11 million barrels. Both were higher than what analysts’ were expecting. Gasoline inventories had a small build of 452,000 barrels and US production rose by 21,000 bpd to 8.515 million bpd. Crude oil tanked from the high, trading down to 41.93 and then grinded lower to the eventual low of the day.
There are two days left to the trading week and traders respected the 50WMA. Crude has resistance at 42.50 and then 43.03. If Crude is able to bounce off support, I would look to short the rally into the resistance levels as I think support will be tested again and we could see Crude Oil test support down at 40.92 (the 200DMA). Place stops in accordance to your account size and risk tolerance.
- High 43.20
- Low 41.68
- Last 41.91
Daily Pivot Points for 7/28/16
- R2 43.78
- R1 42.85
- PIVOT 42.26
- S1 41.33
- S2 40.74