Short WTI oil binary straddles on crude inventory checks

The major event in US for the day is crude oil inventory amid other data events are such as 10y bond auction and budget statement.

Inventories of crude oil in the US are decreased by 1.95 million barrels in the week ending May 29 of 2015 as reported by the U.S. EIA (Energy Information Administration).

Inventory round up is scheduled today during US session today, Current forecasts stood at 1.5 millions.

Commodity futures update:

Oil futures extended gains, with U.S. crude and gasoline inventories set to drop and as the (EIA) raised its 2015 oil demand growth forecast.

Brent crude futures rose 1% or 68 cents to $65.55 a barrel. While the US crude climbed 1.6% or 92 cents to $61.06 a barrel.

Option recommendation: WTI Oil

We would like to recommend keep a hedge by shorting At-The-Money straddle WTI oil at 60.78 levels on spot levels (both call & put strikes at 61.45) as we see technical oscillators like RSI, slow stochastic are not so confidently signaling strength in upward momentum even though the short term trend is uptrend.

Option writers are advised to have delta value somewhere close to zero on both call & put writings.

We look ahead for the outlook for WTI oil prices to remain range bound between 58-63.10 levels in near term basis, hence short straddles would protect prices locked in this range.