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Went out to brokerage clients before the bell

Crude Oil (July)

Yesterday’s close: Settled at 68.09, down 1.37

Fundamentals: Crude Oil futures have attempted to rally after last night’s Caixin Chinese Manufacturing PMI showed an expansion at 50.9, but concerns remain persistent ahead of the June 4th OPEC meeting. Furthermore, the cartel has not invited the Wall Street Journal, Reuters, Bloomberg, and other news sources, though the Financial Times, CNBC, and others were invited to report on the meetings in Vienna this weekend. This begins to highlight how close OPEC+ is keeping the meeting to the vest, especially after the misreporting of comments from the Saudi Energy Minster a week ago. U.S. inventory data will be front and center, due at 10:00 am CT. Expectations are for -1.101 mb Crude, -0.369 mb Gasoline, and -0.118 mb Distillates.

Technicals: Price action responded to major three-star support at 66.82-67.16 yesterday but rally attempts have stalled between first and second key resistance. We do believe one reason for support to act strongly is the Option Skew, which we noted here yesterday. Most simply, the CME’s OPEC Watch Tool highlights the probability of a production increase, decrease or no change. Due to the sharp slip to start the week, put premium picked up at a fast pace, and there is now a 50/50 chance OPEC will increase production or leaves it unchanged, and we view this as opportunity. Price action must close back above major three-star resistance at ... Click here to get our (FULL) daily reports emailed to you!

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