Head of Commodity Strategy
Summary: After yesterday's surprising API report the oil market's attention now turns to this afternoon's stock report from the EIA, which could provide another surprise.
Crude oil trades higher after the American Petroleum Institute (API) yesterday reported a surprise drop in US crude stocks of more than 4 million barrels, very different to the 3 million barrel increase expected by the EIA later today.
So far global oil demand remains robust despite data pointing to a global economic slowdown. A slowdown which negatively impacts demand growth could be the trigger that requires an extension of the current deal.
WTI crude oil has found support at $55/b after Monday’s Trump tweet helped trigger some profit taking. The trading range is currently defined by the rising wedge with resistance at $58.3/b and support at $53.8/b. A break below could spell trouble from a technical perspective and signal a return to support at $52/b followed by $50/b.
In the preceding five weeks up until February 12 the net-long managed to climb by 54k lots. Out of this relatively small increase some 50k lots were attributed to short-covering while just 4k lots came from fresh buying. This despite having seen WTI crude oil rally by 25% between December 24 and February 12.