FxWirePro: Can anyone dare to touch crude? How do we position crude ahead of EIA’s inventory check

Do you think crude has bottomed out? What about supply glut? Has sanction lift off on Iran started contributing crude production?

Series of questions still lingering around crude's bear run.

When all eyes curious on crude's recovery from the lows of 34.29  on 18/Dec, this week again bear run has resumed, to seek its deep tunnel bets on U.S. supply data due later in the session will report a considerable increase.

This week WTI crude futures have dropped back again at $36.71/brl after rallying 11.6% from those lows of 34.29.

While, Brent futures dropped 1.67% to $37.16. A day earlier, the global benchmark jumped 3.19%.

The American Petroleum Institute stunned market contestants yesterday by stating that U.S. oil inventories increased by 2.9 million barrels last week.

Inventories of crude oil in the US dropped by 5.877 million barrels last week (on 18/12) compared to markets forecasts of a 1.1 million barrels rise. While gasoline inventories increased by 1111 thousand barrels, below market expectations but the sixth week of gains.

Shortly EIA's is lined up to announce this week's inventory size and it is forecasted to print at -1.8.

Trade recommendation:

So from current levels keeping speculation mindset we recommend shorting near month futures for target towards $36.36 levels again, however short term traders keep a strict stop loss at 37.30 levels. Thereby, we have attractive risk reward ratio.

If puts are overpriced relative to calls, the arbitrager would sell a naked put and offset it by buying a synthetic puts. Similarly, vice versa when you think calls are getting overpriced in relation to puts.