Oil closed yesterday above key $50 level as the production cut seems to be real. But while Saudi Arabia claimed they are going to cut production by a significant amount, on the contrary new supply is coming and the main source is the US where the production is still at 11.7 M Barrels. Despite crude inventories dipped by 1.7M barrels, to 439.74M barrels, they remained above their five-year seasonal average of 435M barrels.The other side is the end products from which gasoline stocks jumped 8.1M barrels to 248.1M barrels. According to EIA data this was the largest weekly rise since December 2016. And distillate stocks also surged by 10.6M barrels, to 140.04M barrels.
Given these data combined by the concerns that the impact of trade war is still to come, it seems that any bullish effort will most likel to be short lived. It could be a combination of short covering to reload for another sell off or a short term speculative activity, but the fundamentals in medium term are pointing to the downside. Watch the demand prediction in the monhtly oil reports and the the % of neg surprises in corporate earnings.
We think that if the WTI can manage to close the week above $50-51.3 zone, the bulls may try to get to the previous uptrend line and could test a zone btw $60-64 in the coming few weeks where the buying power will likely fade. Price action will be key for short entries so with the obve in mind watch the charts for timing
Given these data combined by the concerns that the impact of trade war is still to come, it seems that any bullish effort will most likel to be short lived. It could be a combination of short covering to reload for another sell off or a short term speculative activity, but the fundamentals in medium term are pointing to the downside. Watch the demand prediction in the monhtly oil reports and the the % of neg surprises in corporate earnings.
We think that if the WTI can manage to close the week above $50-51.3 zone, the bulls may try to get to the previous uptrend line and could test a zone btw $60-64 in the coming few weeks where the buying power will likely fade. Price action will be key for short entries so with the obve in mind watch the charts for timing
