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 a tale of two markets with WTI up 0.86% to $69.35 for the front contract the day before roll while the second WTI contract rose 0.3% to $67.95. That’s one heck of a spread. Brent on the other hand fell 0.45% to $72.58.
Key was the debate about supply and demand. The Saudis said they aren't oversupplying the market, and that exports will drop 100,000 barrels while the Norwegian oil workers strike has ended.
I could bang on this morning with lots of words about what happened overnight and what drove prices. But that's not the point of this note. If not much happened then there is not much to be said. So, my takeaway is there was a lot of fitting the price action into the narrative. It seems clear the roll of the Clc1 contract tonight US time is impacting trade in that market at the moment.
So my takeaway is that it was a messy night of concerns about Saudi supply and the maelstrom of concerns about the global growth profile. Those concerns are stemming from a combination of the changed technical outlook for Brent (front contract) now that the 1-year uptrend plus recent months consolidation patterns have both broken, together with investors, central banks, and credit rating agencies reassess the impact of the trade war and relatively high oil prices on growth and thus oil demand.
From a technical standpoint Brent did rally but not as high as it may have. I’m going to stick to my target in the mid to high $66 region. Tonight's close on the week is going to be interesting in both Brent trend terms and where WTI ends up after the roll.
Here's Brent anyway.
On the day it’s fairly quiet. We get Kiwi visitor arrivals and then Japanese inflation data before tonight's release of German PPI. We also get inflation and retail sales in Canada.
Have a great day's trading.
Chief Market Strategist
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