Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Oil Surges Amid Falling U.S. Inventories: Where Will It Lead?

By Sunshine Profits (Sébastien Bischeri)CommoditiesSep 16, 2021 04:01PM ET
www.investing.com/analysis/oil-surges-amid-falling-us-inventories-where-will-it-lead-200602193
Oil Surges Amid Falling U.S. Inventories: Where Will It Lead?
By Sunshine Profits (Sébastien Bischeri)   |  Sep 16, 2021 04:01PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Oil prices rose to their highest level in two months as U.S. inventories fell more than twice what was expected. Where will it lead us?

Trading Position

We took the position in the forecasted $67.53-67.94 key support zone, and some partial profits were saved by our suggested stop-win at $68.82 last week. However, what’s the most important: the main target that we expected previously at $72.30 was finally reached yesterday.

Market Analysis

U.S. crude inventories for the past week fell 6.4 million barrels (Mb), more than double what analysts had expected (2.7). Gasoline reserves have fallen by 1.9 million barrels, against 3.3 million expected. Notably, strategic crude oil reserves have also declined, by 500,000 barrels.

This phenomenon could be explained by the maintenance of a high level of exports despite the impact on production of the passage of Hurricane Ida in the Gulf of Mexico.

Exports have indeed increased compared with the previous week and are now higher than those of the same period last year.

As a consequence of Hurricane Ida, many companies had to suspend the activity of their rigs in the Gulf of Mexico, as well as of several refineries in Louisiana, also hit by the extreme climatic episode.

As a result, gasoline deliveries remain below their level of last year, even taking into account the drop in demand linked to the end of the summer period, with cooler temperatures.

Our view now is that we could see a pullback to previous supports, either $70.61 (which wouldn’t be the best entry from the risk-to-reward point of view) or $69.39 (which would be preferable). This retracement could either happen (Fig.1):

  • Straightaway, which would confirm a long-term bearish trend configuration by failing to break higher, above the $73.52 and $74.77 highs (the next resistance levels). Therefore, the market would be topping at a lower high (as defined by the Dow Theory) [scenario A].

  • Once the auctioneers push the prices higher (at least above $73.52) – this scenario would redefine a new long-term bullish trend (with higher highs) [scenario B].

Given the recent market developments, the weekly chart (Fig.2) shows a bullish engulfing candle that could eventually confirm the continuation of a bullish trend.

Crude Oil Futures Daily Chart.
Crude Oil Futures Daily Chart.

Figure 1 – WTI Crude Oil (CLV21) Futures (October contract, daily)

Crude Oil Weekly Chart.
Crude Oil Weekly Chart.

Figure 2 – WTI Crude Oil (CLV21) Futures (October contract, weekly)

In summary, our trading plan on crude oil relies on various scenarios that we have described. For now, in order to see a clearer market picture, we will wait for confirmation. However, as always, we provide you with a pre-defined position that will (or not) be executed, depending on the next price action and oil supply/demand.

Oil Surges Amid Falling U.S. Inventories: Where Will It Lead?
 

Related Articles

Phil Flynn
Energy Report: A Systemic Risk By Phil Flynn - Oct 15, 2021 4

The Biden administration is faced with a growing energy crisis and is expected to announce a plan that climate change is a systemic risk to the financial system. The real...

Oil Surges Amid Falling U.S. Inventories: Where Will It Lead?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Shahid Ahmed
Shahid Ahmed Sep 16, 2021 7:29PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
An elaborate and unbiased outlook. Thanks dear.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email