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Crude Oil Outlook 28.04.20

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The United States Oil Fund (USO) that was responsible for last Monday’s oil crash into negative territory is once again shaking up oil markets, and WTI is now down more than 21% on the day.

The USO Fund’s administration, USCF, announced on Monday that it intends to sell off all of its WTI contracts for June delivery—that’s all its front-month contracts that the fund was designed to invest in. Instead, the fund will now focus on futures contracts that are further out. The USO’s breakdown will now be comprised of 30% in the July contract, 15% each in the August, September, October, and December contracts, and 10% in the June 2021 contract.

The June 2020 contract fell $3.85 on Monday to $13.09 by 3:52 p.m. EDT. Meanwhile, the July contract is trading $5 higher, and the August contract $8 higher at $21.47.

The last time the USO fund shook up the oil market was one week ago today, the last day before the May 2020 futures contract for WTI expired. What set the disastrous events in motion was traders wishing to exit their positions before the contract expired. The USO, which would be unable to accept delivery of physical barrels of oil, headed for the exit, but found few willing buyers.  

This time around, the USO fund is pulling out of all its near-term contracts over the course of the next few days, sending oil prices reeling once again.

IMPORTANT LEVELS FOR 28/04/2020

RESISTANCE 1 – 1080
RESISTANCE 2 – 1120
RESISTANCE 3 – 1163

SUPPORT 1 – 1000
SUPPORT 2 – 970
SUPPORT 3 – 944

Note:- Support and Resistance May Change after the opening of the Market.

Thanks!

ProCapitas Market-Pro Team

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