RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

With the ninth straight build in crude oil inventories reported by the EIA, April ’17 crude futures finally broke lower and accepted the fundamental consensus that there is just too much oil in current reserves.  With last week’s report of a meager 1.5 million barrel build, the March 8 report of 8.2 million barrel build was just the confirmation the bulls needed to throw in the towel and let the bears have the day.    

Since the start of 2017, WTI crude futures had found support and a range bound market.  The lows of this range were clustered around the 52.00 handle, and with crude now comfortably below this area, I would expect 51.50 to 52.00 to make for good resistance if the market decides to test higher.  For now, April crude is finding support, as expected, into the 50.00 to 48.60 Fibonacci support zone.  This Fibonacci support is created by the 50% and 61.8% retracement levels of the rally form the lows of August to the highs of January. 

In my opinion, WTI Crude has confirmed its intention, and the battle over trend that has dictated price action since the start of 2017 has come to an end.  Falling back into a longer time-frame range means opportunities to sell into resistance, as crude tries to find its next major support.  Broken support from the start of this year, from the 51.50 to 52.00 area, should now be tested as resistance and should keep the market suppressed for the foreseeable future.  To the downside, the 50.20 to 48.60 Fibonacci zone is the only real supportive area before prior lows around the 45.00 handle.  With the technical picture now starting to re-align with the fundamental picture of oversupply, added conviction in crude trading plans is on the horizon.


Crude Light 240 Chart


Dan Hussey