Get 40% Off
⚠ Earnings Alert! Which stocks are poised to surge?
See the stocks on our ProPicks radar. These strategies gained 19.7% year-to-date.
Unlock full list

Supply And Production Constraints Drive Prices

Published 20/07/2018, 10:23 am
Updated 06/07/2021, 05:05 pm

Originally published by AxiTrader

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

QUICK SUMMARY

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.

BIGGER PICTURE

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.

Chart

DATA:

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.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.