“Quick, Quick, Slow, Slow”, is how the energy markets have been trading the past week and a half. We have danced around the 200 day moving average, currently at $49.39, in West Texas Intermediate for September delivery for the past 8 trading sessions with quick spikes and pullbacks peppered throughout that time frame. As of 11:21 am EST, WTI is up $0.04 at $49.43, RBOB is down $0.0093 at $1.6204, and Heating Oil is down $0.0034 at $1.6364.
Pushing above the $49.39 level signals a move up towards the 6 month downward channel-top of $49.83. On the downside, breaking below the $49.39 level can place a near-term low of $48.18. Headlines and trading volumes continue to be light. Compliance with agreed to production cuts and production increases from Libya and Nigeria, still rule our headlines. With bullish news from the Saudis cutting their crude allocation in September by more than its pledge and bearish headlines of Royal Dutch Shell restarting a number of its units at the Netherlands Pernis refinery ahead of its previously estimated time, I’m afraid we are stuck in a loop of dance steps. A Reuters Poll shows U.S. crude stocks, and refined product inventories down last week. Reuters forecast for week ended 08/04/17 shows crude down 2.8 million, Distillates down 100k, and Gasoline down 1.5 million. As we await APIs this evening and DOE Stats tomorrow, we can only continue the dance. 1, 2, 1, 2….1, 2, 1, 2.