Trading position (short-term; our opinion): Short positions (with a stop-loss order at $52.52 and the initial downside target at $45.80) are justified from the risk/reward perspective.

Although the black gold moved higher after the EIA reported that crude oil inventories fell more-than-expected, the commodity reversed and declined in the following hours as investors turned their attention to the storm’s impact on crude oil demand. Additionally, the report showed that gasoline distillate stockpiles rose in the previous week, missing analysts’ expectations. In this environment, light crude lost 1.03% and closed the day under the Fibonacci retracement. What does it mean for the commodity?

Today’s alert is going to be very brief, because crude oil didn’t do anything that would change the outlook on Wednesday and the same applies to today’s session so far. The only thing that crude oil did yesterday is that it moved initially higher after the market’s open, but then reversed, cancelled all gains and finally closed the day 1% lower. Thanks to this drop, light crude closed the day under the 50% Fibonacci retracement, which is an additional negative development. Such daily reversal is a bearish sign, but the outlook was bearish anyway, so nothing really changed.

Consequently, the comments that we made on Wednesday remain up-to-date also today and if you haven’t had the chance to read our yesterday’s alert, we encourage you to do so today.

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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