Crude Oil continues to coil within its $6.07 range earmarked by its May 6th high of 62.58 and May 28th low of 56.51. Today has seen price trade near the lower end of the range (currently August is at 58.28). Crude is being pressured by the negative sentiment created by Greece and China’s Stock market decline. China has lowered rates and traders believe it is to protect the stock market, not to aid the economy. The Greek impasse just keeps on building with default looming. There is also the June 30 deadline on Iran. An easing in sanctions is a possibility, which would bring more supply to the market. Demand in the US could be slowing as Gasoline supplies increased last week. If Crude can get a close below 56.51, I think a move to 52.50 is possible.
The way the market has been trading however, we could see support holding. If support holds, a rally towards the top of the range is possible. I continue to look to buy Ratio spreads for both puts and calls as I believe the market is getting ready to explode, it just hasn’t made up its mind which way. By strangling this market, you are set for a move either way.
Look at the August 62.00 – 65.00 call 1 by 2 and the August 55.00 – 52.00 put 1 by 2 for possible trade ideas.
