Yesterday’s Close: Settled at 71.69, down -0.30 [-0.42%]
The volatility seen across global markets yesterday was borderline historical following Trump’s decisive victory in the election. The dollar gained considerable strength, especially against the Euro, Yuan and Yen while the Mexican Peso staged a late day reversal in weakness that was impressive.
The commodity complex sold off sharply, with assets like Silver making close to 3 standard deviation move to the downside.
Crude oil showed strength relative to the rest of the commodity complex. December futures made an intraday low at 7:15am CST at 69.74 [-2.25, -3.13%]. By 10am futures had rallied back to positive territory and made an intraday high of 72.63 – a 2.89 [+4.14%] move off the lows.
At 9:30cst the EIA report printed fairly bearish figures which helped to ease crude strength. Results of the EIA report are as follows [thousand bbls]:
Crude: +2,149 vs +402 estim
Gasoline: +412 vs -328 estim
Distillates: +2,947 vs +113 estim
Traders should keep an eye on Dollar strength and 10 Year yields. If rates continue to move higher alongside more dollar strength, a leg higher in crude will increasingly feel like pushing a sled uphill. On the flip side, if USD and bond trades start to unwind into the fiscal year end, a short covering rally in crude would likely provide support.
Traders should also note that there is potential for a restart of Chinese stockpiling of crude oil supplies. While this activity has not been reported yet, an aggressive stockpiling program would follow their previous Trump playbook.
Intraday chart shown below:
WTI Crude Oil futures ripped into recent highs yesterday, but have failed to clear this newly consolidated major three-star resistance level at 72.21-72.67. With price action peeling back into U.S. hours, we will monitor our Pivot and point of balance for continued construction. Below there stands our defined support levels in which price action responded yesterday, and a close below rare major four-star support at….
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