With just under an hour to go until Janet Yellen issues her statements on U.S. monetary policy, all is quiet on the Western front. Trade across the markets has been tight as expected. However, November WTI crude oil futures is an exception, posting a 60 cent gain on heavy volumes.

Inventory Stats

This week’s crude oil inventory numbers are in:

Event                                        Previous             Projected         Actual

API Crude Oil Stocks                 6.181M                 NA               1.443M

EIA Crude Oil Stocks                 5.888M                3.493M         4.591M

This year’s hurricane season has been a trying one for U.S. Gulf Coast oil producers. With operations going offline on a seemingly weekly basis, it has been difficult to accurately quantify supply levels.

From an active traders standpoint, engaging the oil market using a strategy based upon fundamentals has been a monumental task.

Trading WTI Crude During FED Announcements

As a general rule, I do not engage commodities markets during central bank announcements. Comments from the FED can sway price action in a myriad of unpredictable ways. Also, getting in and out of the market efficiently can be a challenge.

November WTI Crude Oil Futures, Daily Chart

Today we have seen WTI trade north of $51.00. This type of extension begs for a retracement, but with the upcoming news, anything is possible.

A few technicals:

• The compression zone of $50.00-$51.00 is still very relevant

• 38% retracement of $49.77 may come into play if the current intraday high holds

• Psyche level of $50.00 may be a magnet for price action

Overview: The technicals show us a bullish picture of WTI crude, but that can change dramatically in the next hour or so. In my opinion, we will see a retracement towards the key psyche level of $50.00 as we move towards the U.S. session close.

Trading this market is inherently risky ahead of the FED. If you are in, be sure to keep the liabilities low and the upsides high.