A Lot To Look Forward To
It wasn't long ago when WTI was flirting with $62/bbl and people were panicking over the possibility that we could see oil fall into the $50s. This is where being data-driven comes in crucial and helps alleviate the uncertainties associated with market volatility. On Monday last week, we published a piece titled, "Should You Be Worried About The Oil Market?"
In the article, we pointed to two factors that suggested the oil sell-off was more related to positioning than fundamentals.
China's very elevated crude imports.
Refining margins.
At the end of the article, we gave ourselves two important signals to watch out for:
If we are correct that end-user demand is actually strong and oil's sell-off was position based, then we can easily test our theory.
EIA high-frequency oil inventory data needs to start turning the corner starting with this week.
Oil prices should swiftly regain the $69 to $72 support range by the end of next week following the position washout.
Fast forwarding to today, we've had two back-to-back bullish EIA oil storage reports, and WTI is currently trading above $75/bbl. For the moment, oil bulls can breathe a sigh of relief.