WTI Crude Oil Trading

#WTI / Weekly & H4 / Triangle Idea

WTI CLIMBS ABOVE $56 AHEAD OF API DATA BOOSTED BY RISK-ON FLOWS
4 September 2019, 19:24

 

1. Upbeat data from China allows market sentiment to recover.
2. China's cabinet reaffirms commitment to support economy.
3. Coming up: API's weekly crude oil stock report.

Crude oil prices gained traction during the early trading hours of the Asian session on Wednesday as the upbeat data from China eased fears over a slowdown in the world second-biggest economy, which is also the second-biggest oil consumer.

Chinese economy showing signs of life
After closing the last three trading days in the negative territory and losing nearly 5% in during that period, the barrel of West Texas Intermediate staged a decisive recovery today and was last seen trading at $56.16, adding 4.15% on a daily basis. Earlier today, the monthly Caixin China PMI report showed that the business activity in the service sector at a more robust pace than expected with the Services PMI rising to 52.1 in August from 51.6.

Commenting on the data, “China’s economy showed clear signs of a recovery in August, especially in the employment sector," said Dr. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group. "There’s no need to be too pessimistic about China’s economy, with the launch of a series of policies to promote high-quality growth.”

On the same note, the Chinese cabinet today said that they will maintain a prudent monetary policy and will finetune the policy in a preemptive way with an aim to support the economy and keep consumer prices stable.

With the addition of easing fears of a no-deal Brexit and its potential negative impact on the global economy, risk-on flows continued to dominate the market action and allowed risk-sensitive crude oil prices to stretch higher. Later in the day, the American Petroleum Institue will release its weekly crude oil stock report.

A new Green Arrow is boss, for a while, anyway. On the WTI H4, EMA20 was crossed at ~54.66. The HoD was 56.58, for an advance of ~190 pips.

The October and April downtrend lines are intact, but PA is almost at the April trend line around 57 as I draw it (#3548). Failure to break the April line could lead to a retreat.

I'm thinking tomorrow's EIA data could be a big one. API showed a surprise build earlier. If we get a surprise build tomorrow, prices could drop big after the recent gains. If you're interested in checking it out, I just posted the preview for tomorrow's data: EIA Weekly Petroleum Data - Sept 5th Preview

I opened a short WTI position today near the close and then added to the position in the past couple hours after the China/US trade talk news. A risk asset like crude will need a lot more than a trade deal if both the #1 and #2 economies are slowing.

From what I can tell, today's rally was reversed on the release of the Federal Reserve's Beige Book. Then, WTI prices took another hit on the API data. Here's a look at the CL front month with volume shown on a 5M chart:

Interesting excerpts from the Fed's Beige Book:

1. Retailers in Boston said there was a slowdown in getting products from non-Chinese Asian manufacturers, as ports in these countries were said to be not yet able to handle the increased shipping demand.
2. In New York, a major retailer said that had raised prices for furniture and other big-ticket items but that they were likely to reverse those hikes as consumers were not responding well.
3. In Cleveland, manufacturers were not laying off workers but were taking other steps to reduce labor such as fewer shirts, reduced overtime, fewer temporary employees and shrinkage by attrition.
4. Ports in the Richmond district saw robust activity from strong import volumes.
5. Retailers in Atlanta detected some uncertainty among consumers about the geopolitical environment, and expressed some concern about the upcoming holiday season.
6. Some retailers in Chicago were starting to incrementally increase prices to avoid a ‘single noticeable increase’ when tariffs come into effect.

Amen sir!

If the data is actually surprising in the opposite way, how much upside will it have, given the huge gain yesterday?

I think there could be limited upside if last week's release is any indication. I was surprised to see how a huge surprise draw didn't have any follow through. I included it in the EIA preview, but here's a picture of the part where I mentioned it.

H&s

Hi guys, I follow this thread since my passion for WTI started.

I think we will see huge drop since china tariff started monday! API shows that no one wanted buy crude the past week. My target is 53.30.

Indecision candles are seen in the past 30mins.

20 minutes to inventory report

I share the same view with you, but it just got up to 57.25, where will you give up?

I believe in this area, I find a lot of resemblance between oil and the S&P contract
And I was wrong, the report is in 27 minutes

Welcome!

Sad

I also didn't expect a decline like this.

Keeping an eye on the weekly resistance line