April crude oil had a strong rally on Wednesday as OPEC headlines dominated the early trade with Qatar’s Oil Minister said a production freeze can be implemented without Iran’s participation. Then the EIA report came out and confirmed the API report’s lower than expected build in inventories with a 1.32 million barrel build. Expectations were for a 3 million barrel build in crude inventory. Gasoline, however had a smaller than expected drawdown in inventories of 747,000 barrels. Expectations were for a decline of 3 million barrels. Cushing inventories showed a build in inventories of 545k. Production also fell by .11%. Then the Fed announcement revealed a more dovish Fed than expected, causing another strong rally in crude oil.
Crude traded in a tight range in the overnight session and then as US traders came on board and dissected the OPEC headlines, they bought crude and it rallied past Tuesday's high (37.40) to 37.80. The EIA report put crude on a higher tack into the Fed announcement. The Fed announced they were leaving rates alone and cut back on the number of rate hikes from 4 potential rate hikes to only 2. A potential rate hike will depend on conditions and it will move gradually in raising interest rates. Crude took off, trading up to 38.57 and settled at 38.46. After settlement, crude made a new high at 38.63 and ended the day at 38.60. In my opinion, April crude should trade above the March 11th high of 39.02 and test resistance at 39.64.
High – 38.62
Low - 36.61
Last - 38.60
Daily Pivots for 3/17/16:
R2 39.95
R1 39.28
PIVOT 37.94
S1 37.27
S2 35.93