With the Brexit vote coming closer, traders took a cautious approach towards Crude Oil overnight. It ground lower into the US session and traded to a low of 48.85 in the morning.
Rumors that Nigeria reached an agreement with the Niger Delta Avengers helped pressure August Crude Oil. This was denied by the militants and helped spark a rally. Price recovered and pushed higher into the close, settling at 49.85.
Traders were also wary of the API report and were looking for a drawdown of 1.7 million barrels. The report came out at 3:30 PM Central Time and showed another massive drawdown. Crude Oil inventories fell 5.2 million barrels, the largest in 6 months.
Inventories fell in Cushing, Oklahoma by 1.311 million barrels, much larger than the 50,000 barrel drawdown expected and gasoline inventories fell by 1.47 million barrels. The drawdown in gasoline was also much larger than expected (-300k). Crude popped on the report, trading to the high of the day at 50.30.
Yesterday’s trading formed a possible bearish hanging man candle. The EIA report is due later today, and expectations are for a drawdown of 2 million barrels. The last couple of reports negated the API reports.
If that trend continues, Crude could reverse course today and head lower. Be aware of any Brexit polls and pay attention to how the market is responding. The Brexit vote is on Thursday, June 23rd.
CLH16
- High - 50.40
- Low - 48.85
- Last - 50.20
Daily Pivots for 6/22/16:
- R2 51.37
- R1 50.78
- PIVOT 49.82
- S1 49.23
- S2 48.27