WTI Crude Continues To Tighten

For the past nine sessions, June WTI crude oil futures have traded in tight daily ranges near $64.00. Energy bulls and bears have fought to a stalemate, with each side wondering when the other will relent. After such a prolonged cycle of market compression, one is inclined to believe that a major market move is headed our way.

Due to the observance of Good Friday, the Baker Hughes Rig Count will be released a day early (today, 1:00 PM EST). Last week’s figure came in at 833, up two rigs from the previous week. Given the seasonality of crude oil production in North America, I expect this week’s Baker Hughes report to show another increase in drill rigs.

June WTI Futures Tighten Near $64.00

Today’s range in June WTI crude oil futures is an extremely tight 69 ticks. Price is in heavy consolidation just north of $63.50.

Here are the levels to watch in this market for the near future:

• Resistance(1): Psyche Level, $65.00
• Support(1): 38% Current Wave, $62.31
• Support(2): Bollinger MP, $62.01

Bottom Line: Going into the holiday weekend, it appears as though WTI is content to settle between $63.50 and $64.25. If this holds through today’s close, a buying opportunity may set up for coming sessions.

Until elected, I will have buy orders queued up from just above the 38% Current Wave Retracement at $62.36. With an initial stop at $61.88, this trade produces 48 ticks on a 1:1 risk vs reward management plan.