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Daily Oil Prices Chart 18 August 2009

Daily Oil Prices 18 August 2009

Even I was pleasantly surprised by the rebound in daily oil prices today following yesterday’s hammer candle but the issue now facing oil traders is whether crude oil can hold onto these gains as the oil market waits for tomorrow’s crude oil inventory data and Thursday’s expiration of the WTI September contract.   Today’s oil trading session finished on a very wide spread up bar boosted in part by a rebound in equities and some weakening of the US Dollar but such events alone cannot explain such a strong reversal especially as it was not supported by any significant volume in the oil futures market.   Indeed the volume of oil futures has been steadily decreasing since Friday as traders and investors squared away their positions ahead of this week’s WTI expiration.  With such low volume oil prices are particularly vulnerable and may overreact to tomorrow’s Cushing numbers, in particular if the build is seen to be more than 500k barrels and when taken together with a scarcity of any other fundamental data we should expect the unexpected.   Overall WTI oil prices traded within a $4.00 range, closing the oil trading session at $69.89, having touched a high of $70.08 per barrel.  With strong support from the 40 day moving average today’s wide spread up bar has propelled daily oil through both the 9 and 14 day moving averages reversing almost completely the strong move lower of last Friday.  The daily oil price now sits firmly amidst the strong congestion between $67 and $72 per barrel and for this momentum to be maintained we need to see a break and hold above the upper band of this region.  Given the strength of today’s move we may see this continue in oil trading tomorrow although it should come as no great surprise if we see an early effort to rise promptly extinguished at the $72 per barrel price once again.  So it will be a day of intra day scalping and short term oil trading opportunities.

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Short term bullish, medium term sideways, long term bullish.