WTI Crude Struggles Amid Strong Dollar and Chinese Demand Concerns, Testing Key Support

Yesterday’s Settlement: 68.12, up +0.08 [+0.12%]

WTI Crude Oil futures made a session high at 69.13 yesterday just prior to the U.S. open (8:23am). Futures were then sold through the open until 10:00am, where buyers stepped in around 67.75.

The selling yesterday was again attributed to weak Chinese demand outlooks and a strong U.S. dollar. The DXY (USD Index) reached highs not seen since June 26th yesterday, driven by a very weak British Pound, and a weak Euro and Yen. The Euro and Yen reached key support levels at yesterday’s close, and a slight retracement of the Dollar is expected in the medium term.

Today, WTI crude oil futures are relatively flat and the dollar is marginally weaker. This morning, month-over-month CPI and Core CPI figures printed in line with estimates at +0.2% (CPI) and +0.3% (Core CPI). While figures were in line with estimates, the “whisper number” was for a CPI beat of +0.3%. The initial reaction to the release has been bond strength (lower yields), which should add to some weakness in the dollar.

Due to Monday’s holiday, EIA figures will not be released until tomorrow. Early estimates for the number are as follows (thousand bbls):

• Crude: +424
• Gasoline: +270
• Distillates: +983
• Refinery Utilization: +0.60%

{Two-Day tick chart; US Dollar Index}

WTI Crude Oil futures are diving to new swing lows this morning and testing into major three-star support at 67.21-67.55. Yesterday’s early morning peak aligns to create first key resistance and a level in which price action must clear in order to begin neutralizing the ugly start to the week. As the day unfolds, the Pivot and point of balance can be a leading indicator of direction at…

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