Yet another perfect storm is setting up in the oil patch adding additional downward pressure on WTI Crude oil.
As the U.S. Dollar (UUP, quote) continues to gain strength from stabilizing and improving Retail Sales data and ongoing concerns over China’s (FXI, quote) demand topped off with increasing supplies in Crude Oil (USO, quote) storage. We see oil supplies continuing to increase as additional refineries come offline including Whiting the largest Midwest refinery for maintenance.
If you are just starting out your day you may have notice Crude Oil hit yet another low of $41.35 during the Asian session. And if you were looking at oil chart yesterday evening (yes there are charts open in my house all night long) you may have noticed a 2% drop right at 6pm EDT to $41.35. Reports are coming out this was a large account stop loss that triggered.
My takeaway - If a large stop order was hit resulting in a new low of $41.35 then this makes $41.35 level in my eyes to watch.
Price did bounce off the $41.35 level shortly after hitting this level but did we just get glimpse of were the line is drawn in the sand? I closed my short oil position Wednesday but will look to pick up some Oct Puts if price breaks the $41 handle.