Oil Trading Chart - WTI Oil Chart 19th August 2009
Daily oil prices rallied sharply higher following the latest crude oil inventory figures in which crude oil stocks fell by 8.4m barrels, confounding the consensus forecast for a further rise of 1.3m barrels (nothing like having a nice wide target to aim at!!). The drop was mainly due to a huge fall in imports, down 1.42m barrels a day to 8.11m barrels a day last week. The oil market appears uncertain as to whether this is a one off caused by delays in tanker arrivals or if cargoes bound for the US are still floating somewhere offshore given the contango that has opened up between Brent and WTI. Alternatively it could simply be that the much vaunted economic recovery is still extremely fragile and that oil demand is still in the doldrums. This would seem to be confirmed by refining capacity which only increased by 0.5% to 84%, following 4 weeks of declines. WTI posted an intra day high of $72.80 and Brent an intra day high of $74.90. From a technical perspective today’s candle on the daily oil chart was a carry through of the bullish momentum which exploded in the oil trading market yesterday. Technically the candle is extremely interesting for several reasons: first the closing price breached the strong resistance at the $72 per barrel price handle which had presented a significant obstacle to any further rise and therefore suggests that we should see oil prices now target, once again the $75 per barrel region once again. Secondly the low of the day found strong support at the 9/14 day moving average cross, once again a positive signal. Finally with a deep lower wick to the wide upper body this again suggests that a bullish flavour is now evident in the market and with all these technical factors combining we should see a rise in crude oil prices in early trading tomorrow. The most significant aspect, of course, is the breach of the $72 per barrel level which now provides a solid springboard to a move higher. Crude oil prices are also being supported by a return to weakness of the US Dollar as evidenced on the USD Index daily chart which once again is looking very fragile.
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Short term is bullish, medium term sideways, long term bullish.
WTI:
Support: $72.21 (14 day moving average) Resistance: $74.51 (high of 07/08/09)
Support: $71.74 (9 day moving average) Resistance: $74.44 (high of 06/08/09)
Support: $69.77 (yesterday’s low) Resistance: $74.30 (yesterday’s high)
DOE Stock Figures (change in millions of barrels)
Crude -8.4 (+1.5) Distillates -0.7 (+0.5) Gasoline -2.1 (-0.8)
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