June crude oil rallied early on Thursday trading up to 44.49 and reaching levels not seen since November 2015. OPEC headlines were once again responsible for the rally as the OPEC Secretary General said some ministers may bring up the production freeze issue even though it was not on the agenda. This was enough to make a new high for the rally before Mario Draghi said the ECB is open to more rate cuts to get inflation to its target. This caused the dollar to rebound off its lows and spark a selloff in crude to its low of the day at 43.05 and settled at 43.18.
It rebounded in choppy trade during the after settlement session and ended Thursday at 43.43. It is in OPEC’s best interest to keep the headlines coming about a freeze because the algos respond to them. Negative headlines such as the Russian oil minister saying it might push production to historic levels of over 12 million bpd don’t seem to affect the algos yet. They don’t know where the sell button is on the keyboard. Iran still intends on reaching its pre-sanction levels of 4 million bpd as soon as possible. Even with US production in decline daily supply still overwhelms demand. I think if crude is able to sustain a break below Thursday’s low, it will test support at 42.22.
CLH16
High - 44.49
Low - 43.05
Last - 43.43
Daily Pivots for 4/22/16:
R2 45.10
R1 44.26
PIVOT 43.66
S1 42.82
S2 42.22