*ROLL TO AUGUST ADVISED

WTI Crude Oil Futures (August Futures)

Yesterday’s Settlement: 73.50, up +0.23 [+0.31%]

Crude Oil featured heightened volatility on it’s way to posting a small gain yesterday with a True Range of 2.94. While smaller than what we’ve seen over the past week, it’s still a highly elevated figure relative to historic price action.

Implied Volatility across the crude complex remains elevated. The rolling 1Month 25 Delta Call implied volatility is still running at ~60%, almost three standard deviations above the 10Yr average.

Today, WTI Crude Oil is higher by +0.80 [+1.09%] to 74.30

The US is reportedly deciding on whether or not we’ll strike Iran in the coming days. This could a negotiating tactic, but I wouldn’t put it past this administration. The US is already heavily involved in both the Israeli and Ukranian conflicts, and the risk of other actors being pulled into Iran in response to US involvement is a distinct possibility.

Geopolitical risk is extremely high, and risks to global commodity markets are elevated. Traders should focus their analysis on the Risk side of the Risk / Reward equation first, and think about potential profits second.

The Fed meeting and presser yesterday featured a very relatable Jerome Powell, who basically said forecasting the path of US economic activity is near impossible at this point. Until we get trade deals done or a walk back on this tariff stance gauging macro economic health is akin to throwing darts blindfolded. Outside of the tariff and trade headwinds, the US economy has shown incredible resilience and strength over the past two years – we just need to get past these tariffs.

Data Releases:

Yesterday’s EIA report followed Tuesday night’s API’s and showed an outsized draw in crude oil

Estimates for today’s EIA report are as follows [thousand bbls]:

Crude: -11,473 vs -2,500 estimate
Gasoline: +209 vs +1,116 estimate
Distillates: +514 vs +1,000 estimate
Refinery Utilization: -1.10% vs -0.50% estimate

Report Highlights:

Crude production unchanged
Jet Fuel production at all-time seasonal highs
Rebound in gasoline demand
Import / Export Imbalance ran -1,700k bpd lower WoW, the biggest drop since mid-April

Technical Analysis:

Futures settled within our 73.41-73.77*** resistance band yesterday but found enough juice in the “US Striking Iran” reports to leg higher above that level. From here the next resistance point is the high set on Sunday Night / Monday at 75.50**.

If we settle above that 75.50, we’re probably going to see $80 in a hurry.

The technicals are bullish, the fundamentals are trending bullish, and geopolitical risks seem to be growing. Fading this bull run may seem enticing, but we need a catalyst to flip this momentum. If you’re in the bear camp, remember that hope is not a trading strategy; if you want to step in front of momentum like this and meet it in the A-Gap, you better have a clear catalyst behind your thesis.

For intraday trading, our pivot and point of balance is set at…

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