FxWirePro: WTI and Brent crude prices on verge of hitting 4 weeks highs – RKI’s on its functionality, stay hedged on further fireworks for fifth

WTI crude prices have been inching higher towards $47 ahead of tomorrow’s EIA’s inventory check, today the rallies seem to be little edgy snapping eight days of gains in what was the longest unbroken rally in more than five years as many traders closed positions ahead of the U.S. Independence Day holiday.

The post-OPEC meeting slide in prices has lasted longer and pushed lower than we had anticipated in late May. Top down balances still give cause for optimism, but the necessary adjustment will be forced back onto shale producers via lower prices. Brent price forecasts are lowered to $50/bbl and $52/bbl in Q3 & Q4, respectively, and WTI to $47/bbl and $49/bbl.

WTI futures were at $46.91 a barrel by 04.30 GMT, down 16 cents or 0.34%. U.S. crude closed up $1.03 or 2.2% at $47.07 a barrel on Monday.

WTI crude prices have resurged from the lows of 42.03 levels to the current 46.88 levels.

The storage tanks at their tank farm in Cushing. The U.S. pipeline operators are selling their underused space at steep discounts to keep crude flowing - angering shippers and distorting an already opaque market for oil trading.

Contemplating further potential bullish risks, we’ve already recommended below reverse knock in ratio call spreads and it seems to be performing as anticipated for upside risks.

Buy Dec'17 Brent 51/54 with 58 RKI 1*2 ratio call spreads. We still like to uphold the same strategy with a view to arresting further upside risks.