WTI Trading Towards $92

by on November 27, 2013 2:43 pm GMT

West Texas Intermediate crude is sinking, heading to $92 per barrel. Stockpiles are continuing to rise as the American Petroleum Institute (API) said that inventories increased a huge 6.92 million barrels last week. However, the Energy Information Administration (EIA) report, due out mid-morning, is said to show an increase of only 750,000. But an increase in supply, is an increase in supply. And as expected, this trend should continue throughout the winter.

WTI crude has traded very closely to supply and demand levels as it is not as affect geo-politically as Brent. The WTI-Brent spread continues to widen with concerns over the Iranian deal. The spread currently stands at $18.63 per barrel.

As mentioned in the weekly WTI and Gas Technicals, crude has been trending sideways within the current downward channel on the daily chart. The technicals would prove correct that a breakout to either end would be swift and big. Crude is heading down to $92 per barrel and eventually to the 78.6 percent Fibonacci retracement level at 91.539.

A close below $92 will signal a move to the Fibonacci support, but the increasing inventories will further break down price action. Price action will hit the end of the channel by year’s end, near $90.33 per barrel.

My prediction of sub-$90 per barrel by the end of December still stands.

1D Chart of QM

1D Chart of QM