If going higher, the price needs to stay above the $47.00 level
The summer draw down of inventory continued today with a larger than expected draw down in crude oil (and gasoline too). A draw down of -4727K was larger than the estimate of-3500K. The private inventory estimate actually showed an add to inventories.
The price of crude oil off the release, pushed the price above the $47.00 level to a high of $47.19. That took the price above the 38.2% retracement of the move down from the Jan 2017 high (high for the year) at the $47.09 level. It did fall short of the July high price from July 5th at $47.32.
The price reversed lower and the contract is currently trading at $46.88. The market is not giving up on the idea that the US supply will keep a lid on prices. Technically, that $47.00-09 level needs to be broken and remain broken to give buyers/longs more confidence in the upside. Until then, the lid is on, and the price may not tumble, but it will remain more depressed.
