Crude Rallies on Bullish EIA—Will It Hold Into the Weekend?

WTI Crude Oil Futures (September Futures)

Yesterday’s Settlement: 65.25, down -0.06 [-0.09%]

Market Movers (Yesterday):

• Trade Deals / Tariff Updates
• Bullish EIA Report
• Iran Nuclear Drama
• Weak Dollar 

WTI Crude Oil futures settled close to unchanged yesterday after a bullish EIA report and key technical support drew enough buyers to halt the bearish momentum.

Speculation and headlines around tariff deals continue to whipsaw markets. The Japanese trade deal doesn’t look great for American exports and will likely be challenged when the new Japanese administration takes office. Positive rhetoric around a European trade surplus surprised markets.      

Israel, Iran, and global nuclear watchdogs continue to negotiate a path forward for Iran’s nuclear ambitions. It’s pretty clear neither side will concede, and the likelihood of a flare-up in tensions remains high.

The Dollar continued its decline yesterday despite rising treasury yields. The lack of confidence in the Dollar as a safe haven is glaringly apparent. 

Today, futures are trading +0.81 [+1.20%] to 66.06

Today’s Movers:

• US Jobless Claims
• Dollar Rebound
• ECB Meeting

The macro environment is trading mixed this morning as trade deals, China tensions, and the ECB meeting are being digested by markets. U.S. jobless claims fell once again as the labor market remains resilient. The Fed increasingly looks hamstrung to lower rates, putting Powell in between a rock and hard place with President Trump pushing hard for lower rates.  

We remain bullish on Crude oil through the end of the week as technicals and fundamentals line up to favor the upside. WTI’s volatility skew favors Calls vs Puts for premium buyers – allowing efficient position structuring on bullish positions.

Data Releases:

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

• Crude: -577
• Cushing: +314
• Gasoline: -1,200
• Distillates: +3,500

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

• Crude: -3,169 vs -1,500 estimate
• Cushing: +455 vs N/A 
• Gasoline: -1,738 vs -200 estimate
• Distillates: +2,931 vs -1,250 estimate
• Refinery Utilization: +1.60% vs -0.35% estimate 

This week’s EIA report featured another bullish surprise as US refiners ran hot, ramping utilization rates by +1.60% vs expectations of slower runs. A detailed EIA breakdown will be made available on our research portal.

Technical Analysis:

Support held in Crude Oil yesterday morning around the 64.75 level right into the US open. The bullish EIA report catalyzed further buying momentum mid-morning, which continued through the US session.

Bullish momentum continued through the overnight session as Asian traders continued to bid risk assets.   

We remain bullish in the medium term, but want to note that some selling may occur here at the US open. Fading overnight moves at the US open has been a price action trend across assets for over a year.

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