After a monster draw on inventories in the API data released last night, crude oil faces a key test on the EIA inventory release today. If EIA confirms API and the oil price can’t hold its gains, trouble in River City, folks. It likely $42 won’t hold and Goldman may be right that crude trades with a $30 handle.
However, there are some short-term bullish factors at play:
The market is thus set-up for a nice squeeze.
A break above $46.53 takes us to the 50-day moving average and puts in play the key level of the recent lower high at $47.32. If that is taken out, its a new short-term ballgame and could firm up a short-term $45 to $52 trading range.
This analysis will be irrelvant at 10:31 AM after the EIA data is released and the market will do what it is going to do.
Just remember, folks, oil is the new widow maker. Its been a very difficult call and trade for both the longs and the shorts.