Make-Or-Break Time For WTI Crude

The spring buying season for WTI crude oil has been a major disappointment for energy bulls thus far. Since rollover from the June to July WTI crude oil futures contract, price has consolidated in the area of $62.50-$64.00. Is it time for the pre-Memorial Day weekend bull run in WTI pricing?

It certainly looks that way. With inventories on deck and the market compressed in a key daily technical area, the table is set for a 2 or 3 dollar move above $64.00. Here is a quick look at the consensus expectations for this week’s inventories:

Event                                       Projections       Previous

API Crude Oil Stocks                      NA                  8.60M

EIA Crude Oil Stocks                 -2.530M             5.431M

One thing is for certain ― a repeat of last week’s massive builds is unlikely. In the event that the API and EIA show a decrease in supply as expected, a run at $66.00 will become highly probable.

July WTI Crude Oil Futures Is Fond Of The $62.50-$64.00 Zone

For the past three sessions, July WTI crude has tightened near the $63.00 level. The technical formation has become compressed between the Daily SMA and Bollinger MP. One way or another, this market is primed for a move.

Here are the levels to watch going into this week’s inventories:

• Resistance(1): Daily SMA, $63.33
• Resistance(2): 62% Retracement, $64.02
• Support(1): Bollinger MP, $62.59

Overview: My read of this market is simple: bullish above $64.02, bearish below $62.60. Each of these are prime scalping entries, with a buy at $64.03 or sell at $62.59 highly likely to produce a fast 5-8 ticks profit.

Today’s close is going to be pivotal for the mid and late-week trade of WTI. If we see tight trade following the API number, then a directional move is all but assured by Thursday’s closing bell. Settlement above the Daily SMA hasn’t happened since May 1 ― this would be an extremely bullish signal moving toward late-May trade.

ABOUT THE AUTHOR See More

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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