Wednesday, May 13, 2015

Oil At Critical Juncture Testing Resistance


Crude oil is higher today following a strong performance yesterday and is testing resistance at an important topping pattern I wrote about on May 7th (‘Crude Possibly Signaling an Important Top’).  WTI firmed on EIA data showing a declining crude stock of 2.2mn to 484.8mnb in the week of May 8th.  
 

On May 6th, the June futures contract traded to a high of 62.58 before sliding to settle at 60.93 for only modest gains.  This sign of indecision was followed by a strong selling session on May 7th.  We have since learned that CFTC described ‘non-commercial’ accounts (sometimes referred to as ‘large spec’)  had increased their net long position by 18,000 to a new 9 month high in the week ending May 5th, indicating to that point some growing confidence in bullish prospects.

 

We should note that yesterday’s advance was the strongest settlement since the topping pattern and has reduced the bearish implications of that technical development.  A higher settle today, especially one that eclipses the May 6th settle at 60.93 would go a long way toward repairing the bullish prospects.  Otherwise, a retreat today, especially one under 60 would suggest a retest of the recent 58.14 low. 








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