Massive API build beats oil back down to new LOD. Target: 42.15

Early this morning, we saw oil trade lower and attempt a run at the 50% fib retracement at 43.52. As the NYMEX oil pit opened at 9am we saw a violent rejection of a 43 handle and oil traded higher for the rest of the session. API data indicated a much larger than expected build in total crude and Cushing stockpiles, which immediately sent oil down 37 cents. As we enter the GLOBEX close, oil is trading at new lows for the day. Expect traders to reign in their bullishness when GLOBEX reopens at 6pm and through the European session. A breakdown through the 50% retracement at 43.52 is a given, and I think we test the prior low target at 42.75, ahead of the EIA data. Anecdotally, oil traders tend to sell into large builds in API data ahead of the EIA release, in an "expect the worst" mentality. So if EIA data is in line with the API data, look for oil to move higher.