WTI Crude Oil Futures (August Futures)
Yesterday’s Settlement: 66.52, -0.46 [-0.69%]
WTI Crude Oil futures fell yesterday as macro markets traded risk-off and oil traders retracted Russia sanction premia from futures contracts.
Price closed right near support, but is trading through it this morning and into the 65 handle. Support will likely be found near 65.40***. We view long positioning at the 65.40*** level as a decent opportunity.
Upside option plays offer an efficient way to attack the long side. Vol and the call skew have been getting sold aggressively since late June, and are back down to near oversold levels.
Today, futures are trading -0.61 [-0.92%] to 65.91
The macro environment is trading mixed / risk-on this morning with equities higher, the Dollar lower, bonds higher, and precious metals higher. Industrial metals and crude oil are traded lower into, and through, the US PPI report this morning.
Today’s PPI report showed sharp revisions to prior-month figures and, much like yesterday’s CPI report, showed that inflationary pressures are continuing to build.
Fed rate cuts continue to be pared down as US rates move higher and the yield curve steepens. Inflation trades are the theme of early trading this week.
Iran reportedly seized a foreign oil tanker in the Gulf of Oman this morning – an aggressive move that will likely rekindle some geopolitical fears.
Data Releases:
Tuesday Night API Report [thousand bbls]:
- Crude Oil: +100
- Gasoline: +1,900
- Distillates: +800
Wednesday’s EIA Report [thousand bbls]:
- Crude Oil: +700 estimate
- Gasoline: -1,750 estimate
- Distillates: -2,150 estimate
- Refinery Utilization: -0.70% estimate
Product demand, refinery margins, and futures spreads continue to signal strong physical market activity now and into the near future.
Technical Analysis:
August futures traded below support early this morning but have found support at 65.65 into the US open.
Long positioning at these levels is a solid opportunity. While the trading environment remains unpredictable across all markets, we continue to lean on medium-term fundamentals for our positioning. Implied volatility has been sold down to levels where option plays are solid vehicles for positioning.
For intraday trading, our pivot and point of balance is set at…
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