Crude Oil Finds Support—Eyes Turn to Next OPEC Decision

WTI Crude Oil Futures (August Futures)

Yesterday’s Settlement: 65.24, up +0.32 [+0.49%]    

WTI Crude Oil futures finished marginally higher after a strong intraday rally. Futures topped out at 66.42 [+1.5], the high made Tuesday as well. 

Iran suspended their agreement to cooperate with the UN nuclear watchdog which helped drive futures higher in the morning. 

Prices fell from the highs after CNN ran a report that the Trump administration was offering Iran incentives to restart talks, including the easing of oil sanctions. 

The Administration’s press secretary, Karoline Leavitt, told reporters there were no plans on refilling the SPR, which also aided in the mid-day sell-off. 

The fundamentals surrounding crude oil remain bullish, and the price remains above our longer-term pivot point, so we remain biased towards the bullish side. 

With Iran-Israel becoming an old story, the markets’ focus will shift towards the next OPEC meeting, scheduled for July 6th. The OPEC meeting is likely to feature increased supply hikes, which will likely bring about another wave of bullish media opinions. 

Today, +0.46 [+0.74%] to 65.71  

The macro environment is trading risk on this morning with equities higher, treasuries lower, and precious metals lower. The Dollar is trading on either side of unchanged. 

President Trump told reporters yesterday that they had “signed a deal with China” on Wednesday, but did not elaborate on the nature of the deal or its specifics. This has caused some markets, including metals, to trade lower. 

Oil traders are still awaiting some clues on how the Iran situation will look moving forward. With tomorrow being the 4th of July Holiday, traders may pare down risk into the weekend. 

PCE data, released this morning, featured hotter than expected Core PCE and an unexpected drop in Personal Income and Personal Spending.   

Data Releases:

Tuesday’s API report was as follows [thousand bbls]:

• Crude: -4,280
• Gasoline: +764
• Distillates: -1,030

Wednesday’s EIA report was as follows [thousand bbls]:

• Crude: -5,836  vs -1,100 estimate
• Gasoline: -2,075 vs +500 estimate
• Distillates:-4,066 vs  +1,000 estimate
• Refinery Utilization: +0.70% estimate 

Fundamental reports continue to trend bullish, supporting markets at these levels.

Technical Analysis:

Futures failed at our 66.00 resistance level yesterday and settled within this newly established trading range. 

Futures remain above our longer-term pivot pocket, and 64.23*** represents a solid buying opportunity in our view. 

For intraday trading, our pivot and point of balance is set at….