Crude Oil Today - WTI and Brent continue to rest on support

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 higher on the day Friday but slipped on the week. WTI ended at $65.91 while Brent was at $71.83 with gains of 0.7% and 0.6% respectively. Worries over demand continue to weigh however. 

BIGGER PICTURE

Oil markets look fragile to me right now.

There is still residual concern that the Iran sanctions will eventually bite and send prices sharply higher. So the shorts are very wary to put the boot in even though it does feel like China’s economy is slowing and that global demand may not grow as much as traders thought just a couple of months back.

Certainly the ongoing troubles in Venezuela also help support prices. The weekend devaluation is incredible and speaks to the deep malaise gripping the country and the decline of its oil industry. That too is keeping a floor under prices.

But you have to wonder, as China again says it will continue to work with Iran,  how impactful the US sanctions will actually be on Iran production and exports. I don’t know. It’s unusual for the world to face a=off against the US in such a circumstance. We’ll just have to wait a few months to see what the actual sanction impact is.

In the meantime the inventory data in the US this week is going to be important.

Another week of bigger than expected builds could see WTI and Brent finally break the support zones. We’ll see. In the meantime I’m respecting those levels unless or until they break. Here’s WTI, it looks to be on the cusp of a big fall, I’ll discuss Brent in my video a little later this morning. 

Click on me, I'll expand
Click on me, I'll expand

DATA:

It’s quiet on the data front today, indeed this week save for the minutes of the RBA, ECB, and FOMC meetings. The flash PMI’s later this week might be of interest as well. ON the day though it’s German PPI and a speech from Atlanta Fed President Bostic which are the highlights. We haven’t heard from the Fed in a while. That might be interesting.

Have a great day's trading.

Greg McKenna

Chief Market Strategist

gregmckenna.com.au

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