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OILUKNOV20 – Brent Crude Oil (November)
OILUSNOV20 – WTI Crude Oil (November)
WTI Crude Oil (OILUSNOV20) and Brent Crude Oil (OILUKNOV20) have both extended their declines following yesterday’s break below technical support. The latest weakness apart from the technical sell extension has been driven by continued worries about the pace of the recovery in global fuel demand and renewed dollar strength following last nights debacle of a debate between Trump and Biden.
Adding to this, speculation that Libya’s oil industry, all but shut down since January because of civil war, may see rapid output growth over the coming months. So far production has returned to 250,000 barrels/day from sub-100,000 just a few weeks ago with JPMorgan and Goldman Sachs both seeing it reach 500,000 barrels/day by the end of year.
The demand side meanwhile remains troubled by the continued rise in Covid-19 cases leading to renewed lockdowns. With the timing of a widely available vaccine still uncertain, the captains of the three biggest independent oil trading houses don’t see a meaningful recovery in global oil demand for at least another 18 months.
Despite these latest developments, crude oil has done relatively well with the price still holding levels seen in June when the recovery story looked somewhat brighter. While resistance in Brent crude oil as per the chart looks solid around $43.50/b, the downside has so far also been capped by a number of recent lows around $39.50/b. For the final quarter we lift our Brent crude oil range by 3 dollars to a $38/b to 48/b range with the downside risks most dominant during the coming weeks.