Crude Oil Today - A big draw and Iranian tensions see prices hurdle resistance

Market Analysis /
Greg McKenna / 23 Aug 2018

Welcome to Crude Oil Today, my brief look at what's happening in oil markets and what it might mean for prices. 

As ever, feedback welcome

QUICK SUMMARY

Brent consolidated the break of trendline resistance the previous night while WTI crashed through multiple resistance with solid gains of 2.9% and 3.1% respectively. A big draw in US crude inventories and some belligerent chat between the US and Iran helped fuel these breaks and Brent sits at $67.89 while WTI is at $67.89.

BIGGER PICTURE

I didn’t get a chance to do a blog on Oil yesterday but in my video I highlighted the break in Brent of the downtrend and the massive convergence of resistance that WTI was sitting just below.

That break in Brent proved the precursor to a solid rally overnight as the EIA inventory data showed a big draw in US crude and a solid run rate of 98.1% for refineries.

That crude stocks fell 5.8 million barrels compared to expectations of a 1.5 million draw was always going to get prices moving higher.  Throw in the technical set up, the break of important resistance, and belligerence from John Bolton – who was in Israel – toward Iran and Iranian comments back that it will hit the US with “maximum pressure” and you have your recipe for the kind of explosive rally we saw last night.

Momentum is with the bulls now. In my video I highlighted a run toward $68.34 for WTI so if that gets bested – last at $68.03 – then I’d be expecting another $1 maybe $1.50. Here’s the chart.

Click on me, I'll expand
Click on me, I'll expand

Please note I talk about both Brent and WTI each day in my Markets Video.

DATA:

Looking at the day ahead the big event is the release of the raft of “flash” PMI’s across the globe. That will give us a quick sniff test on the health of the global economy. Singapore inflation is out in our timezone today along with the Japanese leading index of economic growth. Tonight it’s the ECB minutes that will capture the attention. If the Fed was keeping an eye on the trade tensions surely the ECB will be worried. We’ll see. Later in the US it’s jobless claims, and new home sales.

Have a great day's trading.

Greg McKenna

Chief Market Strategist

gregmckenna.com.au

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