Despite the Right Projections, the Entry Was $1 Too High

Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

Trading positions

~~WTI Crude Oil [CLU22]~~ ~~Short~~ ~~around the $103.16-105.18 resistance area (yellow band) with~~ ~~stop~~ ~~just above $108.28 and~~ ~~targets~~ ~~at 99.66, 96.22 & 90.65~~ – Entry was not triggered in the end.

As expected last week, the trajectory for crude oil went back up towards $102 before dropping dramatically down to my 2 projected targets. The only problem was that the last rally before the fall was rejected by the bears, who took over. Given that I estimated the $103.16-105.18 resistance area (highlighted by the usual yellow band) to be the optimal risk/reward level to go short (for a stop placement just above July’s high, $108.28), I did not get the trigger at this level since the WTI market topped at $101.88 (~$1 lower) before skydiving.

However, this is part of trading, sometimes we miss an opportunity if it doesn’t fit into our trade plan.

Fundamental Analysis

Fundamentally, yesterday we saw a sharp increase in commercial crude oil reserves (+4.5 million barrels) in the United States, according to the following oil stock figures released by the Energy Information Administration (EIA):

U.S. Crude Oil Inventories

The increase in inventories of 4.5 million barrels took the market by surprise, while forecasts were for a slight drop of 600,000 barrels.

In addition, OPEC+ announced an increase in their total production volume of just 100,000 barrels per day for September, which does not have a high significance for the market but is considered more like a kind of concession to calls for Saudi Arabia to increase its production.