A formidable charting settlement is aligning with a whirly hurling toward a Texas coast, and traders seem confused.  Take heart, it’s OK, and you’re not alone.  A pivotal motorist of Oil direct has been refiners, that are aligned alongside a Gulf Coast of Texas (where this bad child vacationed as a immature man).  Refineries have been scheming this week for a Tropical Storm incited Hurricane by tying enlightening activity, that is shortening most of a direct seen in a Oil market.  Friday’s EIA Crude Oil Inventory Report showed that U.S. Oil inputs (refining activity) are during record levels with a gentle domain (~600,000bpd). 

The prolongation aspect of Oil in Texas is in West Texas, distant and divided from a hurricane.  Additionally, Oil prolongation is not approaching to delayed down where we could see a mismatch once again between supply, that is steady, and direct that is dropping as refiners ready for a initial whirly of Harvey’s strength to strike Texas in 13 years. 

Now, on to a charts.  We’ve been examination final week’s extremes to expect where cost will approaching move.  Last week’s low of $45.38 and final week’s high of $49.13.  A mangle subsequent $45.38 would open adult a draft settlement famous as a visual triangle.  The improvement would be from a pierce from $50.20 to $45.38.  A mangle subsequent $45.38 would preference an contingent pierce to a reduce $40/bbl section where Oil consistently has found support.  A mangle above $49.13 would nullify this view.  Until $49.13 is broken, we will now demeanour reduce as direct could be damaged by Harvey promulgation gasoline prices higher, and Oil’s cost lower.  A proxy outcome to be certain as these markets are mostly correlated, though traders should be on a watch for short-term Oil debility if some-more refiners are taken offline than formerly expected. 

Oil – US Crude: Retail merchant information shows 67.5% of traders are net-long with a ratio of traders prolonged to brief during 2.07 to 1.  In fact, traders have remained net-long given Aug 14 when Oil – US Crude traded nearby 4785.9; cost has changed 0.6% reduce given then.  The series of traders net-long is 14.3% aloft than yesterday and 5.9% aloft from final week, while a series of traders net-short is 15.2% reduce than yesterday and 10.5% reduce from final week. 

We typically take a contrarian perspective to throng sentiment, and a fact traders are net-long suggests Oil – US Crude prices might continue to fall.  Traders are serve net-long than yesterday and final week, and a multiple of stream view and new changes gives us a stronger Oil – US Crude-bearish contrarian trade bias (emphasis added).