Crude Oil Futures Update, Prices Higher, Risk-On

Energy Futures Update

Energy Futures Update

Crude Oil Futures (August)

 

Yesterday’s close: Settled at 54.11, up 1.94

 

Fundamentals: Crude Oil has been awaiting a moment to ignore bloating U.S supplies, growing U.S production and slimming demand. Yesterday was that day. Crude roared higher along with risk assets in a central bank induced frenzy. But let’s not forget there is an ever-present geopolitical threat with Iran and OPEC is likely to extend cuts in two weeks. Just two days ago, Iran announced plans to breach the nuclear deal if Europe won’t help them export and there are reports they are in talks with Russia and China to find a settlement mechanism. OPEC officially announced they will meet July 1st and OPEC+ will meet the following day; we expect them to extend cuts, the question is whether they up the ante. It may not be ironic that they are meeting after President Trump and President Xi meet at the G-20 Summit in Japan.

Yesterday’s private API survey signaled less of a draw than analysts expect coming in at -0.812 mb. Gasoline was a larger build at 1.46 mb and Distillates fell by 50,000 barrels. Expectations for today’s official EIA data are -1.077 mb Crude, +0.935 mb Gasoline and +0.712 mb Distillates. Crude inventories have grown for nine out of the last 12 weeks and we are not talking about small builds. In fact, the only three draws were actually some of the smallest deviations from zero. We do feel that merely a confirmation that inventories have not grown again would be supportive to the market under two conditions. First, we do not see another large build in Gasoline that offsets such and to a lesser degree Distillates. Second, we do not see another 100,000 bpd of production added.

As a reminder, the Fed releases their policy statement and projections at 1:00 pm CT and this will affect risk-assets.

Technicals: We reestablished a minor Bullish Bias on Crude Oil yesterday and it gained 3.7% running into our only major three-star resistance level at ... Please sign up for a Free Trial at Blue Line Futures to view our entire technical outlook and actionable bias and levels.

About the Author

Bill Baruch is President and founder of Blue Line Futures, a leading futures and commodities brokerage firm.