WTIC, weekly'2
WTIC, monthly2
Summary
Suffice to say... it looks like we have a marginal lower low of $42.41 in March, and from there.. we're battling upward. Most notable, the weekly 'rainbow' chart, which is offering the first green candle since last June. This is pretty damn significant. The monthly cycle could take another 2 or 3 months to turn green.. at which point we may be maxing out in the $60/70 zone.
To be clear.... the over-supply issue has NOT been resolved.
Shortly after the close of today, the latest API report was issued... a 12.2 million barrel surplus.. the biggest weekly amount in 30 years.
It remains somewhat bemusing that people are so overly obsessed with RIG counts, when that has little to do with actual supply/output. You could close ALL the rigs tomorrow, that sure as hell doesn't mean the existing wells aren't still extracting oil.
With Oil seemingly floored.. and the industry surprisingly content with things.. it'd seem OPEC will not have to consider ANY supply cuts at the next scheduled meeting in June. So.. in the bigger picture... over-supply will likely remain a problem well into next year... not that I consider 'too much oil' a problem for the broader economy.
The outlook
So... a multi-week/month bounce into the summer appears underway... probably maxing out somewhere in the $60/75 zone.. .and then resuming lower to $35/30. Right now.. the latter downside looks out of range until next year.
*With the bigger weekly cycle turning bullish, I will consider going long Oil this Thur/Friday... there is a clear gap zone on USO.. that would make a tempting entry...
USO 60min
With API, and also EIA reports set to knock oil lower for a few days.. taking USO to the $17.70/50s.
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Looking ahead
Wednesday will see the latest EIA oil report, along with the FOMC minutes (2pm).
*Fed official Powell will be speaking, maybe more 'threats' of delayed rate rises and possible QE4 will be issued.
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Goodnight from London