Insights 
VT 
The price of WTI crude oil has settled at $64.15, reflecting an increase of $0.90 or 1.42%. During the day, the price reached a high of $64.23 and a low of $62.95, closing near its peak.
Earlier in the day, the price dropped below its 200-hour moving average, a first since 21 August. However, it has settled above the 100-hour moving average, which is at $63.74. Contributing to the upward movement was a larger-than-expected drawdown of 2.4 million barrels, compared to the anticipated 1.863 million. Gasoline inventories also reported a decrease of 1.236 million barrels.
Bullish Signal from Inventory Drawdown
Given the price strength and the larger-than-expected inventory drawdown, we see today’s move as a bullish signal. The market is absorbing supply faster than anticipated, suggesting underlying demand is firm. This creates a supportive environment for higher prices in the near term.
This positive sentiment is amplified by recent macroeconomic data and seasonal risks. With the US Services PMI for August recently beating expectations at 54.1 and forecasters closely watching Tropical Storm Leo forming in the Gulf of Mexico, the potential for both demand strength and supply disruptions is rising. These factors often lead to increased volatility and upward price pressure as we head into September.
Looking back, we saw a similar pattern of strong summer inventory draws leading to a price rally into the autumn of 2023. That historical precedent suggests the current setup could be the beginning of a seasonal trend, not just a one-day event. The consistent draws, with last week’s being even larger, point to a tightening market that traders should not ignore.
Strategies for Potential Upside
Therefore, we are considering strategies that benefit from a potential move higher over the next few weeks. Buying out-of-the-money call options, such as the October $67.50 contracts, offers a way to participate in the upside while defining risk. We are using the 100-hour moving average at $63.74 as a key level of support to monitor our positions.
