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 EIA weekly report showed another increase in crude oil and fuel inventories, market players shrugged off these bearish numbers and focused on a weakening dollar, which usually supports the price of light crude. As a result, the black gold gained 1.95% and hit an intraday high of $54.06, but did this increase change anything in the short-term picture of the commodity?

Today’s alert is going to be quite short, because although crude oil moved a bit higher, it didn’t do anything new. Yesterday, the black gold approached the right shoulder of the head and shoulders formation (the Jan 17 high of $54.32), but there was no breakout above it. This is a repeat of what we already saw in the previous days and there are no bullish implications of this move.

Consequently, the comments that we made on Thursday 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. We will provide you with a bigger update on Monday, once we get the weekly closing prices.

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, Gold & Silver Fund Manager

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