April Crude Oil traded in a tight range (34.86 High and 34.46 low) in the overnight session, as traders digested the inventory reports from the last two days. At the start of the U.S. session Crude Oil made its low for the day at 34.19 and then Crude surged to new highs; trading to 35.32 as the Nigerian Oil Minister announced a meeting is in the works for March 20th. He said this meeting between OPEC and non OPEC producers will cause “a dramatic price movement” in oil.  Of course, this meeting announcement was denied by an OPEC delegate according to Reuters. No decision has been made on the meeting; no date or location agreed upon. Smaller OPEC nations are continuingly trying to talk up price as they are suffering from low oil prices. So far it is working as Crude continues to react with higher prices to these announcements. The denial sent Crude lower and it settled at 34.57. Crude didn’t do much after settlement and ended the electronic session at 34.69. In my opinion, Crude Oil’s rally is limited. I see resistance at 37.50 and support at 31.71.  With April option expiration on March 16th, I propose selling a strangle to collect premium.  I would like to sell an April 37.50 call for $4oo and an April 32.50 put for $600. You would collect $1,000, less commissions and fees. Your risk is an expiration above 37.50 or below 32.50.   

 High 35.32                       

 Low  –  34.19                                

 Last  –  34.69                               

Daily Pivots for 3/4/16:           

R2

35.86

R1

35.28                  

PIVOT

34.73

S1

34.15

S2

33.60

     

                           

                                        

                          
For those interested I hold a biweekly livestock webinar on Wednesday March 9, 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.

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Ben DiCostanzo

Senior Market Strategist