The weekly crude oil inventories cycle is complete and supplies are on the rise. Earlier, the U.S. Energy Information Administration (EIA), reported a massive weekly stocks gain of 6.771 million barrels. This figure comes on the heels of Tuesday’s American Petroleum Institute (API) release of a positive 3.545 million barrel build. In short, oil supplies are up and prices are down.
July WTI Crude Oil Futures Continues To March Toward $50.00
Following a brief Tuesday respite, July WTI crude oil is back on the bear. Prices have fallen dramatically since today’s 10:30 AM EST release of the EIA report as traders have piled on the short side of WTI.
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Bottom Line: Aside from $55.00, July WTI crude has consolidated at several psychological levels before extending to the downside. This was the case at $60.00 and $52.50 ― is $50.00 the next big-round-number to be hit?
It certainly looks that way, with growing supplies driving WTI prices toward an immediate test of $50.00. If this continues, going long July WTI from just above $50.00 isn’t a bad way to fade the trend. Until elected, I will have buys queued up from $50.27. With an initial stop at $49.72, this trade produces 100 ticks on a bounce from the $50.00 area.
The added levels of participation in July WTI are likely to produce at least a short-term rejection of the $50.00 barrier. While counter trend trades are always risky, the rewards can be great. With a bit of luck, we will see this trade go live during the late session or U.S. overnight.
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Sir , I want you to help me . I have buy orders on WTI and the lot size is very high and my account is seriously reduced as a result of downward move . I am still holding in to the positions . Is there any hope of rally from 51,41 area ?. Urgent reply will be much appreciated
Olayiwola,
Holding longs in WTI right now is a dangerous proposition. Intraday charts are pointed down and sentiment is negative. It looks like price is heading for a test of $50.00 in the near term. If there is to be a rally, it will likely come at the traditional pit close near 2:30 PM EST. To be honest, this market can trade back to $52.00 or plunge to $50.00 today…managing your open positions is up to you and the structure of your trading plan.