With the OPEC meeting front and centre, it’s time to consider the daily chart for the WTI futures contract once again, especially as we come to the end of the trading week with the monthly NFP release ahead. Remember, yesterday’s meeting was inconclusive as member states struggle to reach a deal. Further details expected today. But before we get to the price action, let’s rewind to Wednesday and the weekly oil inventories that once again recorded a big draw in the storage at the Texas Cushing hub, coming in at -6.7mbbls against a forecast of -4.2mbbls, making this the sixth straight week we have seen not only a draw but a draw that beats the market’s expectations. So it is a positive boost again.
Moving to the chart, it is of course yesterday’s price action that grabs the eye for several reasons.
First, the widespread up candle propelled crude oil away from the short-term congestion in the $73.50 per barrel, closing the session at $75.23 per barrel, and before opening marginally lower this morning to trade at $75.24 per barrel at the time of writing. While there was a degree of selling and no doubt profit-taking on the surge higher, as denoted with the wick to the upper body of the candle, it is not indicative of any inherent weakness.
Second, note the volume associated with yesterday’s price action. It is the highest on the chart, confirming not only the validity of the move, but also, by association, this is a genuine break away from the congestion phase and not a fake-out.
Finally, the price has now moved into a low-volume region on the VPOC histogram and, as a result, will require much less effort in terms of volume to move higher through the $76 per barrel region in due course.
So there are many reasons to be cheerful for oil bulls as we come to the end of the week. While there will be intraday volatility on any OPEC agreements, the die was cast yesterday with the longer-term bullish trend remaining intact.