As summer nears a close and kids finally muster up the courage to dive off the high dive, echoes of “Marco, Polo!” fade into the thumb tested winds, whilst the headwinds in the energy markets that were ever prevalent just a month ago seem to have slightly shifted into a tailwind going into the second half of the year. WTI for September delivery closed above the $50 level for the first time in two months. During that same period, Heating Oil and RBOB have both rallied about $0.30 each. Technically, WTI just touched the short-term downward channel-top at $50.05. A break out above the $50.05 level, should head to the next major resistance of $50.69 - $50.88. Closing above those levels indicate a move towards $52.00 over the next several days. Downside support sits around the 200 day moving average of $49.41. Breaking below that level will most likely lead to $46.55 over the next two weeks.
As of 11:55 am EST, we have already violated the 200 day moving average. WTI is down $1.55 at $48.63, Heating Oil down $0.0387 at $1.6285, and RBOB down $0.0312 at $1.6454. A preliminary Reuters’ poll showed U.S. crude inventories were forecast for the week ended 7/28/2017 to have fallen for a fifth straight week. Crude is forecasted to draw 2.5 million barrels, Distillates to draw 200k, and Gasoline to draw 1.1 million barrels. Will reduction in U.S. shipments, production caps for Nigeria and Libya, July monthly crude draw of around 26 million barrels, settlement above the 200-day moving average for the first time since May, and a Shell 400k bpd Dutch Pernis Oil Refinery shut down for at least a couple of weeks be enough to have WTI gain another leg up from these levels? Or, will today’s API and tomorrow’s DOE stats depict another picture in the near term? Only thing we can do is tread slowly towards the end of the diving board, take one quick look at the water and everyone cheering you on way down below, and…..SPLASH!