Crude Oil At Inflection Point. Why A Pullback Could Be Healthy

Higher lows and higher highs since April, the consolidation
Open interest sends a message, inventories rose again last week
Crude oil is at an inflection point

On April 20, the expiring May NYMEX Crude Oil Futures contract fell to a price that most market participants never imagined when they reached over $40 per barrel below zero. Since the NYMEX futures call for delivery of West Texas Intermediate crude oil in Cushing, Oklahoma, the lack of storage capacity sent the landlocked energy commodity into negative territory as it became a bearish hot potato. Holders of the expiring contract had nowhere to park the crude oil, and buyers at zero and below wound up scrambling for an exit as the price plunged on that fateful day. Brent crude oil, a seaborne oil, fell to its lowest price of this century at $16 per barrel in late April.

Meanwhile, the bottom on the now active month August contract came on April 22 at $20.28 per barrel. Since then, the price more than doubled at the most recent high at $41.63 on June 23. It has yet to fill the gap on the daily chart from March at $42.17. Crude oil was sitting trading on either side of the $40 per barrel level last week. While the trend since April remains bullish, the price has run out of some of its upside steam. The United States Crude Oil Fund (NYSE:USO) is an ETF product that tracks a portfolio of nearby NYMEX WTI futures.

HIGHER LOWS AND HIGHER HIGHS SINCE APRIL, THE CONSOLIDATION
Crude oil took an elevator shaft to the downside from February through April. Since then, it has been on a staircase higher.

Crude Light (Globex) Daily

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