RJO FuturesCast

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Energies

Crude Oil has a Weak Week

Posted 05/24/2018 3:31PM CT | Michael O'Donnell

As of Thursday afternoon, the July crude oil contract continued its turnaround which began Tuesday.  This followed an up Monday followed by a high of $72.90 on Tuesday, followed by yet another API which turned out to be the opposite of Wednesday’s EIA build in inventories.  While an API and EIA not matching have become the norm lately, it also did not help that there is talk of OPEC easing or eliminating the production curb quota.

Although this turnaround has occurred amid talk of managed money exiting their longs/booking profits and the market failed to test $73 per barrel; there is also a noted bottleneck with increased refining utilization and draws in distillates.

Looking ahead, we must wonder if the $70 level will hold as the market appears to have lost momentum and remains overbought by some indications along with bearish fundamental supply news.

Should this turnaround reverse and $73 be tested again, we have no recent resistance to act as support.  It will also be interesting to note whether the Brent WTI spread pictured below continues its uptrend or rolls over.

Crude Oil Jul ’18 Daily Chart

Crude Oil Jul '18 Daily Chart

 

WTI vs Brent Crude Oil Spread Chart

WTI vs Brent Spread Chart

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Michael O'Donnell

Senior Market Strategist
Mike started his career in the markets on the floor of the Chicago Board of Trade as a trade checker for a local market maker in the Dow Futures pit. This led to interning with an independent introducing broker and going on to work with a number of market participants including: speculating clients, hedge clients, introducing brokers, futures commission merchants, commodity trading advisors, proprietary traders, trading educators, system creators, and a number of international financial market participants.
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