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WTI crude oil:

April WTI crude oil lost $1.40 on heavy volume of 1,316,137 contracts. Volume shrank somewhat from March 7 when the April contract gained 1.98 on volume of 1,392,057 contracts and total open interest increased by 6,991 contracts. On March 8, total open interest declined by 30,111 contracts, which relative to volume is approximately 10% below average, and a total open interest decline on yesterday’s loss is bullishly congruent. The April contract lost 68,432 of open interest.

As this report is being compiled on March 9, the April contract is rocketing higher, up $1.47 or +4.03%, which is puzzling many people because of the sizable inventory build of crude oil in this week’s EIA report. There was a substantial draw in gasoline stocks and on March 7, OIA announced that April and May gasoline generated short-term buy signals.

Yesterday, the April WTI contract made a low of 36.12, which occurred near the end of the afternoon session. However, the market opened unchanged, and made a low of 36.24, never penetrating the low made yesterday. This is very positive, especially since crude oil was due for another day of corrective activity and as a consequence advised clients to wait until after the EIA report before considering light bullish positions.

As this report is being compiled on March 9, the April contract has made a daily high of 38.19, which is below yesterday’s high for the move of 38.39. This matches the weekly high of 38.39 made the week of January 4, 2016 and is slightly below the weekly high of 38.28 made during the week of December 21, 2015.

In summary, the April contract is trading at formidable resistance levels going back three months. Despite this, we advise against trying to pick a top in this market and it has already rallied over $12.00 from the low of 26.05 made on February 11. We prefer to see some extended weakness and closes below our pivot points before recommending bearish positions. We recommend a stand aside posture.

Brent crude oil:

May Brent crude oil lost $1.19 on volume of 971,840 contracts. Total open interest declined by 20,573 contracts, which relative to volume is approximately 20% below average. The May contract accounted for loss of 38,508 of open interest. As this report is being compiled on March 9, the May contract is trading $1.30 higher and has made a daily high of 41.11, which is below yesterday’s high for the move of 41.48.We have no recommendation.

The Energy Information Administration announced that U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 3.9 million barrels from the previous week. At 521.9 million barrels, U.S. crude oil inventories are at historically high levels for this time of year. Total motor gasoline inventories decreased by 4.5 million barrels last week, but are well above the upper limit of the average range. Both finished gasoline inventories and blending components inventories decreased last week. Distillate fuel inventories decreased by 1.1 million barrels last week but are above the upper limit of the average range for this time of year. Propane/propylene inventories fell 0.7 million barrels last week but are well above the upper limit of the average range. Total commercial petroleum inventories decreased by 0.7 million barrels last week.

Canadian dollar:

The March Canadian dollar lost 67 pips on heavy volume of 133,733 contracts. Total open interest increased by 8,436 contracts, which relative to volume is approximately 150% above average meaning that new short-sellers were entering the market in large numbers and driving prices lower (74.49). The March contract lost 16,088 of open interest, which means there was more than enough open interest increases in the forward months to offset the decline in March and increase total open interest substantially.

Yesterday’s price and open interest action was negative. However, on March 9 the Canadian dollar is telling a different story. Currently, it is trading 89 pips above yesterday’s close and has made a new high for the move of 75.60, most likely aided by the substantial increase in the price of crude oil. This takes out the high of 75.40 made on March 7, and is the highest print since 75.59 made on November 12, 2015.

We have been warning clients to stay away from the short side of the Canadian dollar even though, we think it will eventually be a terrific candidate for bearish positions. However, the large contingent of professional money managers who are massively short the loonie have to be blown out of the market first. On February 1, the March and June Canadian dollar generated short-term buy signals and intermediate term by signals on February 26. Stand aside.

Euro:

The March euro lost 13 pips on heavy volume of 308,181 contracts. Volume increased substantially from March 7 when the March contract gained 18 pips on volume of 196,100 contracts and total open interest increased by 3,979 contracts. On March 8, total open interest increased by a massive 10,594 contracts, which relative to volume is approximately 20% above average. The March contract lost 45,256 of open interest, which means there were more than enough open interest increases in the forward months to offset the decline in March and increase total open interest.

The March contract faces expiration during the next 10 days. As this report is being compiled on March 8, the March euro is trading 25 pips above yesterday’s close on heavy volume. The March contract has made a daily high of 1.1036, which is below yesterday’s print of 1.1060. Tomorrow, the ECB will announce its quantitative easing program, and this is going to have a dramatic impact on the euro and the dollar index among others. The March and June contracts remain on short and intermediate term sell signals.

British pound:

The March British pound lost 4 pips on heavy volume of 238,038 contracts. Total open interest increased by 13,621 contracts, which relative to volume is approximately 130% above average meaning a battle ensued between buyers and sellers and sellers were able to edge the market fractionally lower. The March contract lost 61,316 of open interest and there were sufficient open interest increases in the forward months to offset the decline in March and increase total open interest substantially.

As this report is being compiled on March 9, the March contract is trading 13 pips above yesterday’s close and has made a daily high of 1.4241, which is below yesterday’s print of 1.4277. There will be a terrific opportunity to initiate bearish positions in the British pound, but think it is premature.