Crude Oil WTI CLN20 Heading Towards Gap

The CLN20 contract (Continues Back-adjusted) heading towards the open gab once the market broke out of the micro bracket which is visible on the daily perspective. Looking at the hourly periodicity we can observe three areas which market could pullback towards to find potential support. The previous micro bracket's high, the mean of the prior balance area and it's lower extreme. For now we can wait for either a bearish pattern to conclude the pullback scenario or simply waiting for a bullish pattern to continue the trend towards the open gap which should be revsited and filled soon.

Crude Oil Inventory Increased Around +3.24%

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 15.2 million barrels from the previous week. At 484.4 million barrels, U.S. crude oil inventories are about 2% above the five year average for this time of year. Source: EIA

Looking at the current chart of the Crude Oil Inventory we can see a "trend" higher since some weeks; forming a "double top".

US Oil Rig Count Decreasing

The US Oil Rig Count measures the number of oil rigs functioning in the United States.
- Source Ycharts

The current decrease in the US Oil Rig count is to be mentioned for sure. It could explain the current surge in the Crude oil market (CL) as well (obviously combined with other data).

WTI Crude Oil Daily Observations

Looking a the current daily strucutre we can observe a balance behavior. Yesterday the market closed as an inside day; therefore we can observe the high/low area for any absorption pattern. Obviously a inside day break to surge higher to the bracket high could be possible as well. Additionally, we still have a open gap which should be revisted and filled. For now we observe the balance extremes for an absorption pattern to conclude a rotational scenario to the other side of balance extreme. Let's keep it simple.

How to READ the Commitments of Traders (COT) Report

I thought it would be a good idea to explain how I personally reviewing the weekly CFTC Commitments of Traders (COT) report especially for Crude oil. First thing to note is the very fact that the analysis of this report is only one aspect of the whole analysis process and serves as corroboration of what I am seeing in the market.

You can read the full article of this post as a member on our website. Read the full HOW TO article here.

COT Report for WTI Crude oil as of February 18

The managed money sector net sold 26.687 contracts of WTI Crude oil as of February 18 (Options and Futures combined) with a long liquidation of 15.326 contracts and 11.261 short position contracts got into the market. Looking at the net hold postions we can observe a decrease since January.

You can see the full details here: https://www.cmegroup.com/tools-information/quikstrike/commitment-of-traders-energy.html

WTI Crude Oil Market Update

Let's take a look into the WTI Crude Oil (spot price) market. As usual, we start out with the higher time frame perspective to figure out the path of least resistance. We will also show you the quaterly VWAP in action that we use in our trade methodology next to the monthly, weekly and daily VWAPs. However, firstly we should consider a look with plain candlestick bars starting with the monthly timeframe.

After a heavy one time framing lower market that occured several months the market finally found balance in this area. We bracketing around since two months with a current test of the upper balance area. We'll see how the market will react to this level now.

Moving forward to the weekly bars chart, we can observe a one time framing higher behavior since three weeks inside of a clear balance area. Currently the market testing the high of this bracket area. It will be iteresting to see what will happen here. Will we see rejection or a continuation of the upside movement to test some higher prices?

On the daily perspective the market is testing a balance area high as well. Important to note is the difference between various spot price data feeds. In this feed it appears we broke above the bracket high but on another data feed the market rejected the balance area high. Take a look at this three charts here:

Amazing, which one should we use now? For intra-day traders the very right one would be the best choice as it is the current futures May contract price. For long-term traders the spot price feed would be better as of holding positions for several weeks or months. However, there are a lot of options like continuous or back-adjusted charts and whatever more but this this is another story for itself as well as the topic about which levels are the very correct ones and which feed is better for the technical analysis purpose... Feel free to discuss this on our trading community anytime.

Let's take a quick look with installed EMAs as well. On the weekly chart we can see that the market broke the first two short-term trend EMAs and is on the way to test the third one. The daily short-term trend is actually intact and with the break of the first longer-term trend 50 EMA it seems the market moving higher to test the 100 EMA.

Well, let's moving forward to the Quaterly VWAP. With looking at this chart, we can see the market is trading above the developing value (whole blue area) as well as above the previous VWAP value close area. The VWAP slope of the developing value is also to the upside. We'll see how the market will react to the mentioned balance area high as this could lead us back to the developing value. Currently it appears we could still test some higher prices as there should be a lot of liquidity above the bracket highs.

Here is also a screenshot from the current TPO chart. You can read and learn more about this as well as about our intra-day trading approach on our trading community. Also, feel free to discuss about our top down technical analysis process. We looking forward to see you there!

Stay happy!

All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.

WTI Crude Oil COT Report February 13, 2015

Looking at last week's COT Report for WTI Crude Oil Options and Futures combined as well as NYMEX and ICE combined, we can observe a total Open Interest of 3,474,449 of which Managed Money is overwhelmingly long positioned with 342,819 long contracts and 119,517 short contracts. We can see in the Managed Money section a long liquidation of 11,346 contracts and a short covering of 12,147 contracts makes a net buying of 801 contracts in the week ended February 10.

Long Liquidation = Long position close
Short Covering = Short position close

Altogether the US Total Petroleum (RBOB Gasoline, Heating Oil etc.) Futures and Options Combined as of February 10, 2015 shows a Total Open Interest of 4,302,505 of which Managed Money are long positioned with 463,419 contracts and short positioned with 219,013 contracts. In the week ended February 10, long positions decreased by 12,801 and short positions decreased by 11,896 with net selling of 905 contracts.

Source: COT Reports

WTI Crude Oil COT Report 27.01-03.02

With looking at last week's COT Report Options and Futures combined as well as NYMEX and ICE combined, we can observe a total Open Interest of 3,459,029 of which Managed Money is overwhelmingly long positioned with 354,165 long contracts and 131,664 short contracts. Long positions decreased by 4,248 longs and short positions increased by 2,219 shorts makes Money Managers net sellers of combined 6,467 contracts of WTI Crude Oil in the week ended February 3.

The 'Other Reportables' (Retail Traders) are also more long positioned with 209,519 long contracts and 60,018 short contracts. In the week ended February 3, long positions decreased by 17,990 and short positions decreased by 16,750 makes the 'Other Reportables' net sellers of 1,740 contracts.

Here is the COT Report for the week ended February 3, 2015. Learn more about Open Interest and the COT Report.