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FOREX: Crude Oil Climbs as Winter Storm Hits US

FOREX: Crude Oil Climbs as Winter Storm Hits US

2014-02-05 16:57:00
Research, Research Team
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Talking Points:

Crude oil futures climbed on concerns regarding another winter storm

• WTI price is likely to take retracement from current levels, technical analysis shows

• EIA is due to release weekly oil supply report today, a drop is expected in stockpiles

• Meteorologists predict below-normal temperatures until Feb. 13

Crude oil futures continued to gain bullish momentum on Wednesday amid concerns that another winter storm in the US may boost demand for heating oil and stockpiles slid down last week. Yesterday, West Intermediate Texas (WTI) jumped to $97.71 a barrel from the previous day’s close around $96.52. Brent crude oil futures rose to $105.99 a barrel in the COMEX division of the New York Mercantile Exchange (NYMEX).

WTI is being traded around $97.64 at 06:12 GMT in Asia. Immediate resistance can be noted near $98.47, which is the 76.4% fib level; a break above may expose $99.39 that is 200 Daily Moving Average (DMA) ahead of $100.69, i.e. swing high of the previous wave. Bias will remain bearish as long as the price is below 100.69.

Crude Oil (WTI) Price Forecast

Crude_Oil_Climbs_as_Winter_Storm_Hits_US_body_CrudeOilWTIPrice.png, FOREX: Crude Oil Climbs as Winter Storm Hits US

On the downside, support may be noted around $97.07, the 61.8% fib retracement level. A break below may extend downside movement to $95.96, which is a confluence of the 50% fib level and 55 DMA. Below this support zone other notable supporting levels are 94.82, the 38% fib level, ahead of $93.45, i.e. 23.6% fib level. Swing low of the previous wave is sitting around $91.23, a break below $91.23 will confirm a bearish trend.

The Commodity Channel Index (CCI) and the Relative Strength Index (RSI) are in pivot zone, which mean long moves on either of the sides might be in play. No signs of divergence are being noted with MACD on any timeframe. Distillate supplies, which include diesel and heating oil, were likely to drop around 2.5 million barrels to 113.7 million at the end of previous week, according to a median projection of different analysts ahead of an important report from the Energy Information Administration (EIA) that is scheduled for release today.

Below-normal temperatures are expected across most of the lower 48 states until February 13, Maryland-based MDA Weather Service predicted yesterday. Furthermore, yet another winter storm with heavy snow has hit areas from central Kansas to the Northeast, further increasing heating demand. Gasoline stockpiles slid down by 1.18 million barrels during last week, a report by the American Petroleum Institute (API) revealed. Crude inventories climbed by 384,000 barrels last week, the API figures show. Elsewhere, a recently released US Commerce Department report showed that factory orders dropped 1.5% during January; analysts had predicted 1.7% drop.

On Friday, February 7th, the labor department is scheduled to release figures about the unemployment rate and non-farm payrolls for the month of January. A statement released at the end of the last monetary policy meeting clearly indicated that more tapering in the monthly asset purchase program worth $65 billion is linked to concrete progress in the labor market. Therefore, if we see upbeat results this Friday, then chances are high regarding another cut in stimulus at the forthcoming policy meeting.

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