The market continued its downward trend early Wednesday following the bearish API statistics that were released Tuesday evening. The API statistics showed a crude build of 3.9 million barrels, and builds in both refined products of 4.6 million and 1.1 million barrels in gasoline and distillates respectively. The DOE statistics that came out yesterday showed a build in crude of 1.8 million barrels. However, Cushing inventories drew by 3.6 million barrels. Gasoline built 3.6 million barrels, and distillates showed a draw of 459,000 barrels. The report showed demand was up on both products. After the less bearish DOEs at 10:30 a.m. ET, the market bounced back across the board. WTI settled up $1.41/bbl to $60.60, RBOB finished up $0.0277/gal to $1.7130, and HO rallied $0.0475/gal to $1.8844.
The chart above shows heating oil futures from yesterday morning to today’s trading session. It shows an aggressive rally after the DOE Petroleum Status Report release. The low for yesterday was $1.8084/gal and the high was $1.8925/gal. Some technicians would consider such an intraday move as a key reversal.
Today we wait to see if the correction higher continues. Initially, the market was up early this morning but is now trading off slightly. We are still over the psychological level of $60/bbl on WTI. The most important technical for today is the 8 day MA on RBOB at 1.7304. If we tread above this level, the correction to the upside can gain momentum. If RBOB fails this level, then the sharp downward trend could continue.