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United States Crude Oil Inventories May 12 2021

What does the data mean to the market?

The data indicates the number of crude oil barrels held by commercial firms in the US; this inventory is taken weekly and indicates increases or decreases needed in supply, affecting the price. A Positive number is bad for the oil price and vice versa.

Other oil data is released the night before this report, API Weekly Crude Oil Stock, which the market looks for as an indicator of today's report, which can gauge how it will respond, so it's worth keeping an eye on that also.

There are two mainline of data to focus on. DOE Gasoline Inventories and DOE Crude Oil Inventories, the two lines must not conflict to make this data tradable; Oil is the driving force behind this report.

Historic deviations and their outcome

May 5 2021 Today the data came in inline with API. Luckily I use my hybrid forecasts, which incorporates Wednesday evening's API report. If I ignored API, this would have triggered a trade, and I would have taken a loss. This is a good reminder of why the API data is relevant. We saw some very volatile price action before the news was ignored, and price action returned to the downside trend it was in before the report.

See Chart here:

April 28 2021 Minimal deviation from forecast with no conflict from Gasoline, It was a no-trade for me; however, I saw a healthy 30 pip move in the direction of the news. Oil was already in an upwards trend which continued pre and post news.

See Chart here:

April 21 2021 Oil deviation wasn't even half of what I set up for no trade for me, take a look at the chart though, the price moved in the right direction of the news and immediately reversed and went the wrong way. A reminder that this needs a sizeable deviation from the forecast.

See Chart here:

I will use forecasts of:

DOE Crude Oil Inventories -2800
DOE Gasoline Inventories +3000

Today's trade plan

If I get a deviation of -/+ 3000 in either direction from the forecast on Oil and no conflicts from Gasoline, we can expect a sustained move from Crude Oil or Brent.

Please note that I have used hybrid forecasts to accommodate the following: -

1) DOE Crude Forecast = -2800 (RT)
2) API Actual Crude = -2500
3) DOE Gasoline Forecast = -0600 ( RT)
4) API Actual Gasoline = +5600

Tradable pairs


Hope this helps but please do your own analysis!!

Good luck!!

James Thatcher

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.