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WTI Crude Oil Continues Bearish Run Beneath $68.00

The last five sessions have been miserable for energy bulls, led by the selloff in WTI crude oil. Losses have been extended over today’s session, as pricing has dropped beneath the $68.00 handle.

Values in August WTI crude futures have dropped almost $7.00 since last Wednesday — it now appears that $75.27 has a good shot of being the high water mark for 2018.

Crude Oil Inventories

It is once again time for the weekly crude oil inventories cycle. Here is what the markets will be looking at for the API and EIA stocks releases:

  • API: Due out later today, the API number came in at -6.796 million barrels for last week. No projections are available, so we will have to wait and see what the report itself says.
  • EIA: The EIA report is due out tomorrow morning. Analysts estimate -3.495 million barrels, up dramatically from last week’s -12.633 million.

WTI Crude Oil Technicals

If one simply looks at the price action of the last week in crude, then it is reasonable to expect strong inventory numbers. Increased supply is due to come online very shortly from OPEC, Russia, and possibly Iran. It appears that traders are already pricing the coming supply builds into the market.

August WTI Crude Oil Futures (CL), Daily Chart
August WTI Crude Oil Futures (CL), Daily Chart

Here are the support and resistance levels to watch for the near future:

  • Resistance(1): 62% Macro Retracement, $67.93
  • Support(1): 78% Macro Retracement, $66.01

Bottom Line: The roadmap is simple for August WTI futures — price is trending south. If prices do not remain above the $66.00 level, then a test of the Swing Low ($63.43) is almost a certainty.

For now, a counter-trend buy from $66.04 is a way to capitalize on a bounce off of downside support. Given an initial stop at $65.74, this trade produces 30 ticks using a 1:1 risk vs reward management plan.

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Shain Vernier
US Analyst
Shain Vernier has spent over 7 years in the market as a professional futures, options and forex trader. He holds a B.Sc. in Business Finance from the University of Montana. Shain's career includes stretches with several proprietary trading firms in addition to actively managing his own accounts. Before joining FX Leaders, he worked as a market analyst and financial writer.
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