Medium term
Trade view / 08 June 2016 at 7:39 GMT

API data show solid crude draw, WTI technicals impress

Managing Partner / Spotlight Group
United Kingdom
Instrument: CLN6
Price target:
Market price:

Crude prices rose further in Asia on Wednesday after a solid drop in industry estimates of US crude stocks. On the New York Mercantile Exchange, WTI crude for July delivery rose 0.22% to $50.47/barrel.

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Source: NASDAQ

The American Petroleum Institute said crude oil inventories had declined by 3.56 million barrels, in line with expectations. Distillates rose by 270,000 barrels and gasoline stocks by 760,000 barrels.

Later today at 1430 GMT, the US Department of Energy will release more closely-watched estimates.

Item Expected
Crude Oil Inventories -2.740M
Crude Oil Imports 0.425M
Cushing Crude Oil Inventories -0.704M
Distillate Fuel Production 0.096M
EIA Weekly Distillates Stocks -0.125M
Gasoline Production 0.050M
Heating Oil Stockpiles -0.106M
Gasoline Inventories -0.674M

The time-based technicals for WTI are mixed with the very front end marked as a strong sell, however, I am drawn by the main area from 30 minutes to the weekly, all of which are listed as a strong buy.

Prices have also been moved higher on the back of supply disruption. There is a sense of pessimism from Shell that a damaged export pipeline in Southern Nigeria can be salvaged after a facility at Shell's Nigerian oil subsidiary was severely damaged from a series of attacks last week. These were perpetrated by the Niger Delta Avengers to further their environmental agenda against a host of energy companies in the area.

On Monday evening, Nigeria oil minister Emmanuel Ibe Kachikwu announced that President Muhammadu Buhari's national security team had initiated discussions with the militant group in an effort to slow the rate of attacks.

WTI (five-year):
Source: Spotlight Ideas

The chart above shows that the break of spot above both the 50- and 200-day moving averages and has clearly pushed through the upper limit of the old corrective channel. I think this is worth a speculative long with a protective stop in place.

Parameters (WTI July 16 CLN6, $/b)

Entry: buy 50.45 (0645 GMT).

Targets: 52.47… 54.23… 56.44... 60.00.

Stop: 46.90.

Time horizon: medium term.

— Edited by Michael McKenna

For more on commodities click here.

Non-independent investment research disclaimer applies. Read more
ozy ozy
Hi Stephen. What about gasoline and distillate built? and this time last year crude drawn more, about -6m.. So, for me the data is bearish, but problem in nigeria carries crude up.
ozy ozy
Stephen, what's the last pool survey about brexit in UK? thanks
Stephen Pope Stephen Pope
Re EU Referendum...the lead remain had over leave has narrowed. Opinion polls cast over the last Bank Holiday Weekend were seen as being skewed in favour of leave...not sure why a Bank Holiday would do that. The latest online YouGov poll for The Times shows a six-point fall in Leave support in the past week and Remain ahead by one point, on 43% to 42%.

On June 6 BBC reported...
"The pound has fallen after two separate surveys suggested rising support for the UK leaving the EU.

Sterling hit a three-week low against the dollar, dropping 1.5 cents to $1.4358, before recovering slightly.

Against the euro, the pound was 0.46% lower at €1.2705 at midday.

A YouGov poll found 45% favoured the UK leaving the EU, with 41% wanting to stay, while a separate Observer/Opinium poll also found the Leave campaign ahead by 43% to 40%."


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