In my last post - https://www.marketinsides.com/post/wti-short-trade I discussed a trade which I took on WTI and my outlook for the asset. Shortly after I published the post, the price fell below 40USD per barrel. I took my profit on the trade before that at roughly 40.40USD - this was in line with my first target price of 40-40.50. In the following days we had a strong rebound which was aided by a big drawdown in API inventories last Tuesday.
I saw some talk of the price reacting to the devastating blast in Lebanon. As this was an accident, rather than a terrorist attack, I don't personally align myself with this explanation, but nevertheless we had WTI breaking above 42.50 and trading above 43USD per barrel before EIA inventories on Wednesday.
Once the numbers were released, I saw a very similar picture to what we had the previous week - a confirmation of the headline number, pretty much in line with what was priced in from API inventories the previous day. However, the rest of the numbers painted a bearish picture for demand for distillates in line with my view that we already saw peak demand in the US for this summer.
Therefore I took another short position last Wednesday at 43.39 and closed the trade on the same day at 42.31.
Monitoring the inventories on Tuesday and Wednesday before making a trading decision remains part of my routine on oil for now, as the asset still refuses to make a clear indication of which direction it's going to take - continuation to the upside or move to the downside.
Therefore whilst we remain in this consolidation, I will keep on trading more conservatively in terms of price targets.