WTI crude oil:
September WTI crude oil advanced 73 cents on volume of 1,334,047 contracts. Total open interest declined just 3,768, a number that is dramatically below average. The August contract accounted for a loss of 54,240 of open interest and this indicates there were not enough open interest increases in the forward months to completely offset the decline in the August contract.
As this report is being compiled on July 20, the September contract is trading 23 cents lower after making a new high for the move of 47.74. As we said in our previous notes on crude oil, it may continue to advance, but we have been unimpressed with the market action and see no reason to be involved long or short.
On July 3, OIA announced that September crude generated a short term buy signal and currently remains on an intermediate term sell signal.
From the July 19 EIA Report:
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 4.7 million barrels from the previous week. At 490.6 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories decreased by 4.4 million barrels last week, but are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 2.1 million barrels last week but are near the upper limit of the average range for this time of year. Propane/propylene inventories increased by 3.5 million barrels last week but are in the lower half of the average range. Total commercial petroleum inventories decreased by 10.2 million barrels last week.
From the July 20 EIA Report on natural gas:
On July 18, OIA announced that August and September NY natural gas generated short term buy signals and remain on intermediate term sell signals.
Working gas in storage was 2,973 Bcf as of Friday, July 14, 2017, according to EIA estimates. This represents a net increase of 28 Bcf from the previous week. Stocks were 299 Bcf less than last year at this time (-9.1%) and 141 Bcf (+5.0%) above the five-year average of 2,832 Bcf. At 2,973 Bcf, total working gas is within the five-year historical range.
10 Year U.S. Treasury Note: On July 19, the September 10 year US treasury note generated a short term buy signal and remains on an intermediate term sell signal.
The September 10 year note lost 2 points on light volume of 911,047 contracts. Total open interest increased by just 454 contracts. As this report is being compiled on July 20, the September note is trading up 3 points has made a new high for the move of 126-085, the highest print since June 29.
Remarkably, note prices continue to advance (meaning lower yields) even as equity prices are making new all-time highs. With inflation nowhere in sight, the Federal Reserve has no incentive to aggressively raise interest rates. It is likely an intermediate term buy signal will occur during the next couple days. No recommendation.