Trading position (short-term; our opinion): Short positions (with a stop-loss order at $56.45 and an initial downside target at $45.81) are justified from the risk/reward perspective.

Although the Energy Information Administration reported that crude inventories increased by 9.5 million barrels (almost three times more than analyst forecasts) and gasoline stocks rose by 2.8 million barrels (missing a forecast of a 752,000-barrel increase), the black gold only wavered between small gains and losses as OPEC supply cuts helped to support the price of the commodity. What’s next?

Today’s Oil Trading Alert will be quite short, as basically nothing changed on the market since we commented on it yesterday and today’s entire alert could simply be a repeat of yesterday’s issue. On Wednesday, crude oil increased to $53.51, but then reversed and closed the day slightly above the 50-day moving average once again. This means that the commodity remains in a very narrow range (between Monday’s high and low) and as long as we don’t see a breakdown below the lower border of the blue consolidation and the green support line based on the December and January lows another sizable move to the downside is not likely to be seen. Nevertheless, the Stochastic Oscillator generated the sell signal, suggesting that another attempt to move lower is just around the corner.

Earlier today, we haven’t seen any important breakout/breakdown, which could change the overall situation. Therefore, if you haven’t had the chance to read yesterday’s alert, we encourage you to do so today - it’s up-to-date:

Oil Trading Alert: Crude Oil – Key Resistance Holds

As always, we’ll keep you - our subscribers - informed should anything change.

Thank you.

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

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