ALERT JAN CONTRACT EXPIRY DEC 19th. ROLL TO FEBRUARY ADVISED.
WTI Crude Oil Futures (February)
Yesterday’s Settlement: 69.38, down -0.64 [-0.91%]
The early morning strength we noted yesterday morning fell apart quickly. Futures were sold aggressively through the U.S. Open and showed little life through the trading session.
The sharp rise in the Dollar following the Fed meeting continued through today’s trading session. This alongside negative comments overnight from China’s largest oil refiner dragged prices lower.
Bloomberg reported yesterday that the G-7 is currently in discussions to implement yet another round of targeted sanctions against Russian crude oil. The article stated that some members are discussing the replacement of the “Export Price Cap” with a full ban on on Russian crude.
Should this headline become a reality, it would be a considerably bullish catalyst.
Today, futures are lower by -0.35 [-0.49%] to 69.04.
Core PCE reported cooler than expected inflation for November this morning which is driving the dollar lower here into the U.S. open.
The G-7 sanction headlines are failing to drive any type of bullish price action so far, but the trading session is young.
The macro environment is trading mixed / risk-off, with some sharper risk-on reactions happening after the cooler PCE. Gold and silver are moving higher after the number while the dollar and interest rates are lower, S&P’s are lower by -0.51% but have caught a slight bid after PCE.
Technical Analysis
As we noted yesterday, a settlement above 70.04 would have been ideal for the bull case, and a settlement below 69.73 would give us pause. With yesterday’s weak price action and close of 69.38, we’re shifting our approach towards today’s session to that of patience.
Next week will feature lighter volumes as the world begins to travel and celebrate Christmas. Exaggerated moves within commodity markets around the holidays can be fairly common, as volumes and liquidity diminish and large traders step away from the desk. Our trade selection through next week will be more patient and selective.
While we are still looking to attack the market from the bull-side, we’re waiting until the buy levels come to us. The idea of chasing price in the middle of this well established trading range, within this macro-economic backdrop, through a low-volume holiday week does not sound like a good trading setup.
Our next buy level is positioned at the top end of our key three-star resistance zone at 68.46. Our intraday pivot and point of balance is set at 69.33 while intraday resistance is likely at the our key three-star resistance level of….
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