(WCTW) A Pause Before We Go Higher
We see a pause in the oil rally in the near term before we move higher into year-end. Our reasoning stems from:
WTI is at the pivotal resistance level of $86 to $88. Without a break above this level, the support zone comes back into play ($81 to $82).
Global refineries are going into maintenance. Global inventory draws will slow down a bit over the next 6-weeks.
Extremely low Saudi crude exports in August are unlikely to be maintained.
Chinese crude buying will slow as the Saudi cut extension announcement gives China the ability to plan ahead.
Oil speculators have covered their respective short positions in crude, so a big tailwind from the latest buying will dissipate.