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WTI Crude Oil: September and October WTI crude oil will generate an intermediate term buy signal on July 26 after generating a short term buy signal on July 3.

September WTI crude oil gained $1.55 on strong volume of 1,565,225 contracts. Though volume was heavy, the total open interest increase was disappointing to say the least having gained just 2,009 contracts. The August contract, which expires shortly gained 671 of open interest and September lost 9,496. The modest open interest increase indicates that would be market participants are skeptical of the rally, which leads us to believe it may surprise on the upside.

The COT report released on July 21 and tabulated on July 18 revealed that managed money added 19,535 to their long positions and liquidated 32,551 of their short positions. Commercial interests liquidated 2,904 their long positions and added 6,673 to their short positions.

As of the July 18 tabulation date, managed money was long WTI crude oil by ratio of 2.76:1, up sharply from the previous week of 2.04:1 and substantially above the ratio two weeks ago of 1.71:1.

Although, as we said in previous notes that crude oil could continue to rally, we much prefer the long side of natural gas, however at this point it is premature to enter bullish positions in natural gas. Clients should not attempt to pick a top in the market and should stand aside in natural gas.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) decreased by 7.2 million barrels from the previous week. At 483.4 million barrels, U.S. crude oil inventories are in the upper half of the average range for this time of year. Total motor gasoline inventories decreased by 1.0 million barrels last week, but are in the upper half of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.9 million barrels last week but are near the upper limit of the average range for this time of year. Propane/propylene inventories increased by 0.2 million barrels last week but are in the lower half of the average range. Total commercial petroleum inventories decreased by 9.4 million barrels last week.

Live Cattle: On July 25, August and October 2017 live cattle generated short term sell signals, which reversed the July 13 short term buy signals. Both contracts remain on intermediate term sell signals.

Corn: September and December 2017 corn will generate short term sell signals on July 26, Both contracts remain on intermediate term buy signals.