Today’s API inventory numbers show another large draw, much greater than forecast, which marks two weeks of ‘bullish’ inventory data, amongst an ocean of recent negative news for crude oil.
11/07/17 API Weekly Crude Oil Stock : Actual -8.133M Forecast -2.900M Previous -5.764M
In terms of the July chart, we broke out of this weeks sideways rally earlier in the day. Whilst our trade for the week did move into profitable territory, it was partially closed at breakeven, partially closed in profit, as the market failed to break lower as expected.
As the chart above shows, we have been in a sideways range this week, in anticipation of the inventory data. As the monthly chart (below) shows a bearish trend, and most of the news has been negative for crude oil prices, it was reasonable to sell the top of the channel, as our trade of the week mentioned.
However, now we have broken out on bullish data, it is worthwhile considering fading into long positions, dependent on tomorrows EIA data, and the OPEC monthly report.
The above chart shows a rally to the upper blue line (VWAP +1 standard deviation) on the 6th July 2017. This was after last week’s bullish inventory data.
A very similar pattern has happened today, with the markets breaking higher on bullish inventory data.
It will be interesting to see if the pattern repeats as last week, where there was a major selloff ….. or if we can break out of the month’s bearish pattern, and continue up to a target of $50.