Oil Rises on Falling U.S. Crude Stocks (With Trading Strategy)

Oil prices rose more than 2% to near their highest levels in about a year on Wednesday, after government data showed U.S. crude stockpiles fell to their lowest since March, while OPEC+ maintained its supply cut agreement.

Oil price rose slightly on Thursday, U.S. West Texas Intermediate (WTI) crude was at $55.972 barrel, rose 0.29％, Brent was down to $58.688 a barrel, rose 0.26％ by 11:50(GMT+8) 

Both benchmarks' backwardation, where contracts for near-term delivery are more expensive than later supplies, hit their highest in just over a year at around $2.30, indicating expectations of tighter supply.

U.S. crude oil stockpiles fell last week to 475.7 million barrels, the Energy Information Administration said on Wednesday, their lowest since March. Refiner utilization rates, meanwhile, rose by 0.6 percentage points.

"Refineries are back in business, which is supportive for crude," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "On net, this is a supportive report."

The market has been bolstered by deep supply cuts from the Organization of the Petroleum Exporting Countries and allies, which on Wednesday, maintained their oil output policy.

The day before, a document seen by Reuters showed that OPEC+ expects the oil market to be in deficit throughout 2021, peaking at 2 million barrels per day in May.

"Underpinning the bullish sentiment are tightening fundamentals. Ahead of today's ministerial meeting, OPEC+ hinted that global oil stockpiles will decline below the five-year average by June," PVM analysts said.

The market was also bolstered by news that Democrats in the U.S. Congress took the first steps toward advancing President Joe Biden's proposed $1.9 trillion coronavirus aid plan without Republican support.

More than 100,000 people have died of Covid-19 in the United States so far this year, according to Johns Hopkins University data.

Since January 1, the U.S. reported a total of 100,317 Covid-19 deaths, bringing the total number of reported deaths in the U.S. since the start of the pandemic to 446,689 by Tuesday evening.

The U.S. has had more Covid-19 deaths than any other country, JHU data shows. 

The number of coronavirus infections may be four times higher than the number of cases actually reported, researchers say. In mid-January, CDC estimated the U.S. has actually seen 83.1 million Covid-19 cases since the pandemic began. "Even after adjusting for underreporting, a substantial gap remains between the estimated proportion of the population infected and the proportion infected required to reach herd immunity," the researchers wrote.

New, highly contagious variants are spreading across the U.S., threatening to reinfect people who've already had the coronavirus.

Only about 1.84% of the U.S. population has received both doses of a Covid-19 vaccine. And it'll be at least several months until most Americans can get vaccinated.

Trading Strategy (source: Trading Central)

Pivot: 55.55

Our preference: long positions above 55.55 with targets at 56.35 & 57.00 in extension.

Alternative scenario: below 55.55 look for further downside with 55.20 & 54.60 as targets.

Comment: the RSI is mixed with a bullish bias.

Supports and resistances:

57.60

57.00

56.35

56.18 Last

55.55

55.20

54.60

Pivot: 58.20

Our preference: long positions above 58.20 with targets at 59.50 & 59.90 in extension.

Alternative scenario: below 58.20 look for further downside with 57.70 & 57.30 as targets.

Comment: the RSI is mixed with a bullish bias.

Supports and resistances:

60.30

59.90

59.50

58.85 Last

58.20

57.70

57.30

Guideline for Trading Central strategy 

Trend chart reading guideline

1. First look at the time period in the upper left corner of the chart: ·30MIN and 1H chart shows the trading suggestions for intraday ·Daily chart shows the market trend analysis in next 2-3 days

2. The blue horizontal line on the chart marks the pivot: pivot indicates the reversal of the market. When the price is above the pivot, it indicates an upward trend, when the price is below the pivot , it indicates a downward trend. When the price breaks through the pivot, the trend is reversed.

3. The red and blue thin curves in the Candlestick chart chart are technical indicators: Red line is MA20+Bollinger bands, Blue line is MA50. under the Candlestick chart chart are also the technical indicators: Blue line is RSI, Red line is 9MA;

4. The green horizontal line is the resistance level for a price increase, and is also the profit target for long orders; the red horizontal line is the support level for a price decrease, and is also the profit target for short orders.

How to use TC strategy？

1.[Pivot] is the reversal line of the market trend. When the price up the pivot line which means in Bullish, you can open a long position or Buy. on the contrary, when the price under pivot line which means in bearish. You ‘d better make short positions or Sell. 

2. [our preference] is the main trading suggestion for your reference. You can exit your trading refer to this target or close positions before it.

3. [Alternative scenario] is the plan B for your reference. 

4. [Comment] is the technical analysis of market trends and technical support for trading strategies. 

5. [Supports and resistance] Supports are levels where the price tend to find support as it falls.

Resistances are levels where the price tend to find resistance as it rises. So, exit before the trend reverse.