Welcome to Crude Oil Today, my brief look at what's happening in oil markets and what it might mean for prices.
As ever, feedback welcome
Oil was lower. It’s a classic fit the narrative to the move. Because even though the Trump entreaty was out this time yesterday, his offering to meet the Iranians is being blamed for the fall. Forget about Rouhani’s repudiation of the offer. And then we've had folks fit the big 5.6 million build in API as the culprit.
Anyway, WTI is down 2.4% to $68.44 and Brent is off 2% to $74.24. That could be it folks - see chart below.
You know how I always talk about fitting the narrative to the price action? Check out this chart. The API inventory data came out around 6.30 my time and did show a big build of 5.6 million barrels. But the WTI had already lost 1.9%. Yet one of the best, most influential, and well-respected economists on the planet made a rookie mistake in this tweet.
I’m not popping MEE, just using it to highlight that we all make the mistake of ex-poste rationalisation.
Equally though everything else I’ve read blames President Trump’s offer to talk to the Iranians yet doesn’t mention the Iranians saying no thanks, get out. Maybe it was Trump because that’s what traders seem to have told each other. But it was one heck of a delayed reaction given I wrote about it yesterday morning.
For importantly though, in terms of Brent in particular, is that we've now seen an almost perfect rejection of the old 1 year uptrend channel bottom overnight. That's good for the shorts because we've seen a break, we've seen price retest the trendline (granted we've had a contract change) and now a rejection.
Has Brent seen the end of the second wave and is now poijted lower again? Here's the chart.
API this morning showed a big build. So all eyes will be on the EIA data this evening. That's both in aggregate and with regard to Cushing in particular.
On the day today we get New Zealand employment and labour costs this morning and then it being the start of the month we get the raft of manufacturing PMI’s across the globe. Here in Australia we get the AiGroup’s version. Also, out is an RBI decision on interest rates. Tonight, it’s the ISM in the US I’ll be watching closely along with where Europe is at and then tomorrow morning at 4am my time the Fed will do nothing the market is betting.
Have a great day's trading.
Chief Market Strategist
The information provided here has been produced by third parties and does not reflect the opinion of AxiTrader. AxiTrader has reproduced the information without alteration or verification and does not represent that this material is accurate, current, or complete and it should not be relied upon as such. The Information is not to be construed as a recommendation; or an offer to buy or sell; or the solicitation of an offer to buy or sell any security, financial product, or instrument; or to participate in any particular trading strategy. Readers should seek their own advice. Reproduction or redistribution of this information is not permitted
US equities continue to welcome any high-risk event being put in the rear-view mirror – especially when rates markets look prime to consolidate lower