Crude oil (NYMEX:CLN14) has consolidated at the 106 level as the rally in WTI has taken a session to pause. EIA inventories showed a small drawdown of 579,000 barrels, slightly less of a drawdown than expected. What traders need to watch is that the Brent crude oil (NYMEX:SCN14) contract has now extended gains for the sixth straight session and widened out the Gap to more than $8.50.
Remember, the Brent contract is the global benchmark and should be the contract used when trying to capitalize on global tension. The Brent contract is now testing the 115 level. Call the trade desk and we can help you trade the WTI-Brent spread. Traders will be looking for continued resistance to come in at the highs of 106.84 in the WTI contract but the major line in the sand to the upside remains 107.33.
This uptrend will remain intact until we see a close back below the 103.89-104.23 level is needed to signal a failure. Traders must continue to watch developments out of Iraq as we head into the weekend.
Resistance – 106.84**, 107.33***, 107.68*, 109.32**, 112.24***
Support – 105.87*, 105.45**, 104.23**, 103.89***, 103.19