WTI Technical Outlook: 12/5

by on December 6, 2013 4:49 am GMT

West Texas Intermediate crude is trading into the largest bullish move in nearly five months on news from the Keystone XL pipeline, decrease in crude stockpiles and positive data showing that the US growth is expanding.

Traders are eyeing the non-farm payrolls tomorrow as further indication on the labor market. A higher than expected number will likely give a boost to crude. Analysts forecast 180K jobs added last month, while 204K was added in October.

WTI futures has traded up $6 per barrel in the last six sessions, from just under $92 to $97.80 per barrel. However, momentum is beginning to taper off as price action pulled back to $97.45. The ADX is at 28 but sloping down. The +DMI is also strong at 28, but it is also slowing down as price action may have gone too far, too fast.

“Stronger growth in the U.S. is very positive for crude demand,” said Jason Schenker, president of Prestige Economics LLC. Fundamentals are looking better, recently, for crude. Refineries have increased their operating rate to 92.4 percent, the highest since September. Also, weekly petrol consumption increased 1.7 percent, according to the Energy Information Administration (EIA).

Crude bounced of price action just under the 200 EMA and the 50 percent yearly high-to-low Fibonacci retracement level. Positive employment data could boost prices through $98 per barrel and try to challenge the 200 EMA.

Less than expected payrolls will draw crude prices back a bit with support lying between $97 and $97.14 per barrel.

1D Chart of QM

1D Chart of QM