April crude oil continued its downward push yesterday trading past the 13 DMA (36.11) to 35.96 before finding support and settling at 36.34. Price once again traded in a range after settlement as traders awaited the API inventory report. The report showed a build in inventories of 1.5 million barrels. Expectations were for a 3.2 million barrel build. Cushing had a 471k build and gasoline inventories declined by 1.2 million barrels. Crude rallied somewhat on the news and ended the day at 36.72. OPEC production declined slightly last month as there were minor disruptions in supply from Nigeria and Iraq.
Saudi Arabian production held steady and there are growing concerns about demand, especially from Asia and Latin America. OPEC’s Monthly report also lowered its demand outlook for 2016 by 90,000 bpd to 31.52 million bpd. Today the EIA comes out with its weekly inventory report and expectations are for a build in supply of 3 million barrels for crude and a decline of 3 million barrels for gasoline. We also will have the results of the 2 day FOMC meeting announced at 1pm CT, followed by the Fed Chair press conference at 1:30 pm CT. In my opinion, if crude trades below the 13 DMA, a test of rising support at 34.88 is possible. If crude trades above yesterday's high of 37.40 a rally to test the recent high is possible. I think today could be volatile if the inventory numbers and/ or the Fed surprise.
High – 37.40
Low - 35.96
Last - 36.72
Daily Pivots for 3/16/16:
R2 38.13
R1 37.43
PIVOT 36.69
S1 35.59
S2 35.25