Crude oil tumbled on Wednesday, June 22, 2016, as the EIA report showed a smaller than expected decline in crude oil inventories. Once again, the inventory data from the EIA diverged from the API numbers. While the API reported US inventories declined by a large 5.22 million barrels, the EIA reported US inventories declining by a smaller than expected 917,000 barrels. Traders were looking for a 2 million barrel decline in inventories. Inventories fell in Cushing, Oklahoma by 1.28 million barrels, but gasoline inventories rose by 627,000 barrels. Expectations were for a decline of 650,000 barrels. US production continued its decline and is at 8.677 million BPD. US production has declined in 21 out of the past 22 weeks.
Traders didn’t like those numbers and crude oil sold off hard, trading from above the $50 mark down to support at the 8 DMA. The 8 DMA is at 48.48 and the low of the day is 48.40. Today’s trade produced another bearish candle in my opinion, forming an outside day candle as Wednesday’s high was above Tuesday’s high and its low was lower than Tuesday’s low. Crude also ended the day in the lower end of the range, down from the open. This produced a red candle and indicates sellers won the day. A breakdown from the low could lead to a test of the 50 DMA which is now at 46.84. If crude can muster up a big rally and trade above the Wednesday high, a run to the 51.67 high is possible. With the Brexit vote coming up on Thursday, any hints on the possible end result could be the catalyst for the next move in crude oil.
CLH16
High - 50.54
Low - 48.40
Last - 49.00
Daily Pivots for 6/23/16:
R2 51.45
R1 50.23
PIVOT 49.31
S1 48.09
S2 47.17