The Nov WTI trading session settled at 69.5, had a high of 71.72, a low of 69.23. Cash price is at 71.58(+1.21), while open interest for CLX24 is at 355,290. CLX settled below its 7 day (70.5) ((broke below the 7 and 20 day)), its 20 day (69.74), its 50 day (72.78), and its 200 day (74.93) moving-averages. The COT report (Futures and Options Summary) as of 9/20 showed commercials with a net short position of -199,037 (a decrease in short positions by 7,981 compared to last week) to non-commercials who are net long 175,128 (a increase in long positions by 247 compared to last week).
EIA data this morning showed a draw of -4.5mb, much larger than the forecasted -2.0mb and the previous draw of -1.6mb we had last week. Historically we are ~5% lower than the five year seasonal average. Yesterday the API reported U.S. inventories fell by 4.3mb last week and a further draw of 260,000b at Cushing. It seems today traders are weighing whether or not China’s new economic stimulus will be enough to get their economy and consumption back on track, much of what the analysts I’ve read and traders I’ve talked to over the last two days seem to believe that it’s not going to be enough. Reuters reported that oil platforms in the Gulf for Chevron and Exxon have evacuated staff in the region for Hurricane Helene, which is expected to make landfall tomorrow and has potential to reach Category 4 status. Yesterday Goldman Sachs commodity analysts increased their crude oil forecast for the fourth quarter, projecting that Brent prices will reach $77 by year-end. They attribute this outlook to declining global production coupled with a rise in global demand. This rise in global demand was also echoed in a OPEC+ statement made earlier in the week, with the group seeing an increase in long-term demand for crude. Concerns over China’s crude demand and the economic state in the U.S. and Europe continue to fuel this bearish positioning in the market as we enter the winter months (and the presumed eventual increase in output from OPEC+ after their delayed cuts end), in my view. Yesterday’s trading session saw the high above that $72 resistance line, but Nov eventually pulled back and settled below. I still see the range here being ~$68 as a floor and that ~$72 price as the ceiling for now. Despite the positive API and EIA numbers released this week, concerns about the potential U.S. ports strike starting on October 1, a hurricane in the Gulf, and rising tensions in the Middle East none have seemed to be enough to offset the prevailing sense of global economic pessimism among traders. Today was a surprising day, I thought, given the technical trends, “bullish” news, and the EIA and API data put out.
Jim Rinaudo
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Walsh Trading
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