CRUDE OIL had a draw of 5413K. Consensus was for a build of 150K. BULLISH (AND WAY OFF THE CONSENSUS!)
GASOLINE had a draw of 537K. Consensus was for a draw of 1300K. NEUTRAL (CLOSE TO THE CONSENSUS)
DISTILLATE had a build of 248K. Consensus was for a build of 1000K. NEUTRAL (AND CLOSE TO THE CONSENSUS)
The weekly oil inventory report came a day late this week due to the Memorial Day holiday Monday.
CRUDE OIL has a draw for the third consecutive week and was much higher than analysts anticipated (surprise?); thus, where the focus will be. I always look at the numbers compared to the consensus for a possible indication of where oil and energy related stocks may go. When there is an outlier (such as the crude number today) there is usually a strong reaction one way or the other.
But we also need to look at the charts for direction and any upcoming oil related news events. The latter focus will be on OPEC and the decision today to keep production as is. As far as the technicals let’s see where we are in relation to my last post on the subject two weeks ago and the discussion of the MAB.
USO: after breaking through a recent range high it is now trending upward possibly toward a strong line of defense at 200 TANKS. The WEEKLY chart has little resistance until 50 TANKS at 55.
XLE: the XLE has found its strong line of defense at 200 TANKS for the third time in the last 13 trading days. 21 TANKS are acting as trendline support, so which way are we going to break? The WEEKLY chart could be heading to 50 TANKS at 55.
OIH: the OIH has now broken through the 200 TANKS after finding strong defense at 21 TANKS on the DAILY. The WEEKLY chart could be heading to 50 TANKS at 115.
KOL: broke through 200 TANKS on the DAILY, has restested it and is now moving beyond it. The WEEKLY is now moving in on 50 TANKS at 24.70.
XNG: same as KOL on the DAILY yet on the WEEKLY is close to two strong lines of defense at 50 and 200 TANKS.
Looks like we are going to have to watch for pauses at major lines of defense on the WEEKLY charts for KOL, XNG, and XLE (if it breaks the 200 TANKS on the DAILY) and look for the USO to possibly follow the lead of the equities and head to 200 TANKS on the DAILY. Several opportunities here but will need to watch these strong defense areas for clues.
For an understanding of TANKS please see.
