28 March 2018 at 7:33 GMT
Crude oil trades lower following the failure – so far – to break the January tops in WTI crude oil at $66.66/b and Brent crude oil at $71.28/b. The risk of a double top combined with a bigger-than-expected jump in crude oil stocks reported by the API last night, renewed stock market weakness and a stronger dollar have all helped reverse some of last week's strong gains.
- Increased stocks, equity wobbles and stronger USD all weaken oil
- But chart actions have done little damage to the bullish sentiment
- A break below $64/WTI and $68/Brent needed to sour the tone
By Ole Hansen
So far the chart actions have done little damage to the bullish sentiment and it would take a break below $64 on WTI and $68 on Brent for that to change.
According to the latest COT report covering the week to March 20, funds went into this holiday-shortened week with a very bullish outlook. Long positions in Brent and WTI were outnumbering shorts by a ratio of 13 and 17.9 respectively, the latter being close to the record witnessed just before the market collapsed back in August 2014.
The key focus today is the weekly petroleum status report from the EIA at 14:30 GMT. Oil traded lower overnight after the American Petroleum Institute (API) last night reported a surprisingly big jump of 5.3 million barrels of crude oil. This, combined with the potential biggest rise in crude stocks in a year at Cushing, the delivery hub for WTI crude oil in Oklahoma, more than offset a bigger-than-expected drop in gasoline stocks.
From a seasonal perspective, rising crude oil stocks and falling product stocks are what can be expected at this time of year when refinery maintenance reduce demand for oil and the production of products.
– Edited by Clare MacCarthy
Ole Hansen is head of commodity strategy at Saxo Bank