Fundamental
- Bloomberg notes that given the physical oversupply weighing on sentiment and driving oil into a bear market, investors and analysts now believe there is a growing likelihood that futures will rebound sharply without any change in market fundamentals. It observes that the oil market is increasingly driven by commodity trading adviser (CTA) funds that have built up large short positions and that a dramatic short-covering rally could be in the cards.
- The next move OPEC will make is probably putting a cap on the production from Libya and Nigeria since their production has been ramping up after internal issues in the country. This would be a bullish factor
- Today's EIA report showed a drawdown in Gasoline stockpiles which was a huge factor
- We are still in Peak Season for Oil Demand
Technicals
- $42.55 level was a strong support level and held the price at that level. Bearish trend cannot continue that level is broken
- When oil reached $42.55 is was in oversold territory according to the RSI
- Oil has broken through 42.88 level and the next level it should reach would be its retracement level at the $45.50s area.
- First Target level is the 20 DMA which is at $45.10
- Clearing $45.50 would show a continued move till next resistance of $47.40
DISCLAIMER: THIS IS JUST COMMENTARY AND SHOULD NOT BE TAKEN AS INVESTMENT ADVICE OR RECOMMENDATIONS.
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