Crude Supplies Build, But Can That Derail The Oil Market?
?? Fundamentals
Crude Oil futures fell sharply yesterday, after API inventory levels jumped by 3.2 million barrels. This is the largest build of Oil in 6 weeks. The capacity of the Seaway pipeline was reduced, which could result in large supplies in Cushing, OK, which is the NYMEX (CME Group) delivery point for Crude Oil. The Seaway link carries Oil from Cushing to the Gulf Coast. Petroleum product inventories were a mixed bag.
Gasoline stocks fell by 1.6 million barrels, versus estimates of a 1.3 million barrel increase. Distillates, which include Heating Oil and diesel fuel, rose 1.3 million barrels, versus estimates of unchanged inventories. Crude Oil continues to get outside market support from equities, which seemingly rise every day. The House passed a bill that would expand the debt ceiling, which can be seen positive for equities and commodities. The bill should face little, if any, resistance in the Senate.
?? Technical Notes
Turning to the chart, we see the March Crude Oil contact moving higher since early December with little resistance. Yesterday’s candlestick looks like it could be a key reversal on the continuation chart, which some traders may wish to monitor.
The meteoric rise in prices over the past month and the fact that the RSI indicator shows overbought readings could limit the near-term upside of the market. Prices are currently testing newly established near-term support at the 95.00 level and could reverse sharply if the market is not able to maintain this level.
————————————————————————————-
Disclaimers
This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control.
Derivatives involve substantial risk and are not appropriate for all investors. Please read the “”Disclosure Statement for Futures and Options”” prior to investing in futures or options.
For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and other risks apply.