WTI Crude Oil Futures (May)

Yesterday’s Settlement: 61.33, down -0.20 [-0.33%]

WTI Crude Oil futures finished the day lower, driven by Dollar strength, fundamental selling, and reportedly positive progress on US-Iran nuclear talks.

The progress has been surprisingly good after the first round of US-Iran nuclear talks. The US has walked back its initial red lines of uranium enrichment and the existence of a nuclear program in general, and has instead focused on restricting weapons production and missile types.

If these talks continue to progress smoothly, and Iranian barrells are let back onto the export market, it would once again present a bearish catalyst to this market.

As we stated yesterday, the forward-looking crude oil balance sheet with OPEC’s accelerated production ramp looks bearish, and prices will have a negative drift on days without headlines.

Today, Crude Oil is up +0.59 [+0.97%] to 61.34

China has signaled it’s open to US talks this morning, driving futures higher. The Chinese have laid out some prerequisites before they’ll talk, including the US “showing more respect.”

The Dollar is still trading weaker this morning but has rebounded off the lows. The overnight Chinese news has shifted the macro trade to risk on.

After the close yesterday, the API reported the following weekly figures [thousand bbls]:

Crude: +2,400
Gasoline: -3,000
Distillates: -3,200
Estimates for today’s EIA report are as follows [thousand bbls]:

Crude: +945
Gasoline: -1,707
Distillates: -1,140
Refinery Utilization: +0.45%

Technical Analysis:

Volatility has been tame this week, but could shift at any second with a headline. Our technical view has not shifted much this week, and the Chinese news could help support a bullish tilt.

We’re eying a run back up to last week’s highs of 63.34**. A settlement above here would set us up for considerable chart repair if we get a settlement above 64.10****.

Failure to retest last week’s high of 63.34 keeps momentum squarely in favor of the bears, keeping a run back to the mid-50s in the cards.

Prices are likely consolidating between the lows made last Tuesday of 57.88** and the highs made Thursday of 63.34**.

For intraday trading our pivot and point of balance is set at 60.88 with support at….

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