March Crude Oil made another new low today as it continues its march lower. Reuters reported that Phillips 66 dumped crude oil for immediate delivery on Wednesday signaling a worsening oversupply situation in Cushing, Oklahoma. Futures responded by trading below the 27.00 level, declining to 26.22, before a short covering rally into the start of Fed Chair Janet Yellen’s testimony before the Senate Banking committee, that took price to the highs of the day. It reached 27.48 before breaking down again as she said to the committee that developments in the markets are not severe enough to cause a change in monetary policy. Price consolidated for most of the day, before breaking down into the close as more news about the Saudis maintaining production levels came out. Price collapsed into the close making another new low at 26.05, before settling at 26.21. Right after settlement the Wall Street Journal reported The United Arab Emirates said Saudi Arabia is ready to cooperate on production cuts. This caused a buying spree in Crude Oil taking price up to 27.33. It ended the electronic session at 27.30. The Wall Street Journal question’s the validity of the story, saying they don’t think the news is wrong, but we hear this out of OPEC a lot.
In my opinion, with the end of day rally and Crude testing support at 26.09 and holding, we could see a short covering rally into the weekend as Monday is a holiday and Crude will have an abbreviated session. Crude Oil will continue to be volatile and a breakdown of support (26.09) could take it to support at 22.15. I propose buying March Crude Oil futures on the open, looking for a rally to test resistance between 29.25 and 29.78. Place your stops at a level appropriate for your account.
High – 27.48
Low - 26.05
Last - 27.30
Pivots for 2/12/16:
For those interested I hold a biweekly livestock webinar on Wednesday February 17, at 3pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.
Senior Market Strategist
Walsh Trading, Inc.