September crude oil grinded lower on Thursday, July 21, 2016 making a new low for the week at 44.52 but it was unable to get below the 44.42 low established on July 11th. Crude oil is still in its 2 week trading range and it would take a close below 44.31 (the 21 WMA) to create a path to 41.64 (the 50 WMA), in my opinion.
Support on the daily chart comes in at 44.26 (the 100 DMA) and then 43.03 (the May 10 low) and 42.50 (the April 26 low). Crude did make an attempt during the Wednesday night session to rally but it failed to take out the Wednesday high of 46.13 peaking at 46.09 and then proceeded to trade down.
I think high gasoline supplies during peak driving season is creating worries that crude oil supply is not going to drop as quickly as analysts have been saying. It has been reported that Chinese refiners have been exporting gasoline at a furious pace due to limited demand and dwindling storage capability at home.
If Chinese imports of crude oil slow down, it would be up to India to pick up the slack. India is becoming the new demand darling for bulls, but does it really have the ability to absorb all this supply?
OPEC and Russia will have to slow down production, in my opinion to balance out the excessive supplies and Russia has said they won’t be following along with anything OPEC says.
They have their own agenda. If crude is able to make new lows I would get short looking for an attempt to trade to support. Place stops in accordance with account size and risk tolerance. It would take a supply disruption to get me to look at crude oil from the long side. Tomorrow brings the Baker-Hughes Rig Count.
High 46.09
Low 44.52
Last 45.54
Daily Pivot Points for 7/22/16
R2 46.62
R1 45.58
PIVOT 45.05
S1 44.01
S2 43.48