Trading position (short-term; our opinion): No positions are justified from the risk/reward perspective.

On Tuesday, crude oil extended recent gains and hit a fresh 2016 high after news that Russia and Saudi Arabia reached an agreement on a production freeze (both countries will cap their daily output at near-record levels). Is this rally sustainable?

Today’s alert doesn’t contain any charts because the data that we have received are inconsistent and we don't want to misguide you relying on yesterday’s intraday prices or volume levels. Nevertheless, based on today's crude oil futures’ chart, we can say that although the price moved little higher yesterday, breaking above the March high, oil bulls didn’t managed to push it higher earlier today. As a result, crude oil futures are trading in a narrow range between $41.24 and $$41.90. Therefore, as long as there won’t be confirmation of the breakout above the March high, waiting at the sidelines for the next trading opportunity is the best investment decision for this moment.

Finishing today’s alert, we would like to draw your attention to yesterday’s American Petroleum Institute report, which showed that although distillates inventories dropped by 530,000 barrels and gasoline stock declined by 1.58 million barrels, crude oil inventories increased by 6.223 million barrels last week. Yesterday’s drop in gasoline stocks could be seen as bullish (as the summer driving season approaches), however, we should keep in mind that another increase in crude oil stocks will likely affect negatively market participants, which could push the price of the commodity lower later in the day (especially if today’s EIA report confirms such high increase).

We will keep you – our subscribers – informed should anything change.

Thank you.

Nadia Simmons
Forex & Oil Trading Strategist
Przemyslaw Radomski, CFA
Founder, Editor-in-chief

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