Selling the Bounce in Crude Oil As US Inventories Jump by 8.2 Million Barrels
Skerdian Meta • 2 min read
We have seen some extreme price action in Crude Oil since early March, when the US decided to push for sanctions on Russian Oil and Gas. Although the volatility has picked up even more pace. We saw a crash lower by the middle of June and another decline in the last two days, with the US WTI falling close to $95.
Crude Oil Daily Chart – Can the 100 SMA Turn Into Resistance?
The 100-daily SMA has acted as support and resistance before
Oil was crushed in the past two days in a one-way move down to $95.16 from $111.43. But even with that, there was no oil-specific catalyst for the move as it was caught in negativity about global growth which should be enough to send Oil prices crashing lower in normal times.
Natural Gas Daily Chart – US LNG Facing the 100 SMA Too
The 200 SMA (purple) held as support on the daily chart
Notably, US natural gas is also up 6% today in a bounce after weeks of selling, following the explosion at Freeport LNG (liquid natural gas). US natural gas prices are at the highest level for July after a surprisingly tight weekly inventory report. Storage increased by 60 bcf, less than the 74-75 bcf analysts were expecting.
Natural gas was already higher on the day but jumped to $6.10 from $5.75 on the report. That’s the best level since June 30 when US regulators announced it would take longer to reopen the damaged Freeport LNG facility. The bigger story in the natural gas market is in Europe where TTF hit 184 today, or about $26 in the US equivalent. Year-ahead power prices in Germany and France are at stratospheric levels on worries about a full Russian cutoff.
- US weekly crude oil stocks +8235K vs -1043K expected
- Prior week was -2762K
- Gasoline -2497K vs -480K expected
- Distillates -1266K vs +1133K expected
- Cushing +69K vs -782K prior
The private Oil survey from API late yesterday:
- Crude +3825K
- Gasoline -1814K
- Distillates -635K
- Cushing +459K
WTI crude oil was trading at $103.70 just before the release, up more than 5%. It fell to $103.18 in the aftermath, but has recovered further now, climbing up to $104.40s. But that’s a support and resistance zone and buyers are finding it hard to push above it, although let’s see. We opened a sell signal here yesterday.