September Crude Oil continued its short covering rally on Thursday, August 04, 2016 after a test of the 200 DMA (40.77) failed. Crude oil made an attempt to get back below the daily 200 DMA early Thursday morning as it traded down to the low of the day at 40.43 before fighting its way back above it as US traders came on board and took over trading. Shorts gave up once bullish traders pushed price above the overnight high at 41.41 and took price up to the high of the day at 42.08. This is a bit below the 42.50 resistance level. Unable to make a serious attempt at resistance trade quieted down and traded in a tight range (41.99 to 41.72) for the remainder of the day. Settlement was at 41.93 and Crude ended the day at 41.81. The surprise reduction in gasoline supplies (3.2 million barrel decline) in Wednesday’s EIA report has traders thinking the supply glut is ending and supplies will come into balance. The reduction in gasoline supply has come about as some refiners have reduced production of gasoline as profitability has dwindled and excess gasoline has simply been moved from one area to another, which makes it look like supply has vanished. Tomorrow the Baker- Hughes Rig count comes out. Will the rig count show a decline tomorrow or will we see another increase? I think there is strong resistance at 42.50 and I would short a rally into resistance. Place stops in accordance with your account size and risk tolerance.
High 42.08
Low 40.43
Last 41.81
Daily Pivots for 8/5/16:
|
R2 |
43.09 |
|
R1 |
42.45 |
|
PIVOT |
41.44 |
|
S1 |
40.80 |
|
S2 |
39.79 |
|
|
For those interested I hold a weekly livestock webinar on Friday, August 5, at 1:30pm. 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.
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
