WTI Extends Losses Ahead Of API

Posted Tuesday, October 1, 2019 by
Shain Vernier • 1 min read

Since the mid-September drone strikes on Aramco facilities in Saudi Arabia, WTI has been in a relative freefall. While price did GAP up on 16 September, the action has been firmly bearish over the past 2+ weeks. At this point, it appears as though fall seasonality is winning the day and November WTI futures are headed south.

It is Tuesday and that means the weekly crude oil inventory cycle is upon us. The festivities begin later today with the API Crude Oil Stocks report. Last week’s figures suggested a build of 1.4 million barrels amid falling demand. It appears that energy traders are expecting more of the same this week and hedging WTI longs ahead of the API release.

November WTI Crude Oil Continues To Plunge

As has been the story all year long, crude oil is a weak market. The first sign was the Memorial Day slump back in May. Now, with the end of the year within sight, it looks like WTI is determined to re-test the waters under the $50.00 psychological barrier.

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

Here are a few levels worth watching as we roll into the weekly inventories reports:

  • Support(1): September Low, $52.71
  • Support(2): Psyche Level, $52.50
  • Support(3): August Low, $50.48

Overview: While three support levels are in view, there is a good chance that November WTI steamrolls through all of them in pursuit of $50.00. Barring a terrorist attack or massive draws on inventory, a test of $50.00 is likely by the end of the week.

For the time being, a bearish bias is warranted toward this market. A washout below September’s Low ($52.71) is likely; buying in is not the best idea until we see a sign of trend exhaustion. Right now, being short WTI is ideal until proven otherwise.

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