What will move Crude Oil… (*Not the Dow) – Draw on CL Supply?

Well… Most people are talking about how the Dow Jones could rally up 600 pts, and I can’t stop staring at the Spoos ES moving 10 handles every couple minutes. I sat here feeling confident that we could easily bounce and finally rally higher, as we did all night again, and finally — this time WAS different. We didn’t tank into the end of the day I mean (we ripped up huge, finally squeezing the shorts), *now the real question is, but what happens tomorrow. —- I will constantly use rhetoric to stress that futures are a market focused on what will happen next, not what happened in the past. So with that being said, if you were long the ES today, you made great profits on a 1 lot, if you weren’t, hopefully you weren’t very short. But, that is the past, the trade is done, the move is gone. Let’s move on. — by the time I finish writing this, if you don’t already know what happened in the stock market today, there is your first issue. The headlines popping up on my iPhone are passive, they are old news, the trade happened.

I don’t want to talk anymore about the Dow, I don’t have a position in it, and the record rally opportunity — just took place. But tomorrow there will be new trades to take, even today starting at 5pm.

I want to talk about Crude Oil — When I first started trading futures, there was nothing I feared more than the concept of “shorting crude oil”, that being said, that was the past, and we are focused on the future. So clearly, with the CL trading below 39 a barrel, with record bearishness and everyone screaming we could still go lower. — As a trader, student of finance/markets/economics: I am wondering or dumbfounded how we have still not found “a bottom.”

The number one argument I keep hearing regarding oil is “supply”, people continue to ignore the headlines or other factors that should or could make oil pop higher, and so I would think that until the “supply” story can be exploited otherwise, that argument will keep oil offer.

Well last night we had the biggest inventory drawdown since 2014 in Tuesday API, when it reported unexpected 7.3 million-barrel drop in crude supplies! *Analysts forecasted an increase of 1.9million…

Followed by today, we had EIA results surprising even the whisper # with US DOE Crude Oil Inventories (Aug 21) W/W -5452K vs. Exp. 1450K!

So if the argument is “supply”, yet again, we get draws and surprises to counter than like we did in the past 24 hours with API and EIA… WHY WOULDN’T CRUDE OIL CL BE ABLE TO EVEN END IN THE GREEN, LET ALONE UNCH? *it even almost settled on LOD.

The distillates are clearly not helping, and people are looking at the USD strength, but when the Dow Jones rallies 600 pts and Crude Oil can barely bid higher *after data supporting “maybe we don’t have quite as much over-supply as we thought.” I ask again: WHY WOULDN’T CRUDE OIL CL BE ABLE TO EVEN END IN THE GREEN, LET ALONE UNCH?

So, now where does CL go tomorrow? What will make it move? Take a look at the futures at 5pm and let’s figure it out.

Let’s try again tomorrow. – Happy Trading.

-Bret Rosenthal