Crude oil - selling pressure again?
Crude prices were firmer in early trade this morning, making back a proportion of yesterday’s sharp losses. The jump came after the US said that it plans to purchase crude oil to replenish its Strategic Petroleum Reserve. But the gains so far fall well short of what’s needed to take crude back to Friday’s close which saw front-month WTI trading close to $72 per barrel. Oil gapped lower as it reopened on Sunday night as details emerged of Israel’s retaliation for Iran’s missile bombardment earlier this month. Israel’s attack focused on military targets, including Iranian air defences, as well as missile and drone production and launch facilities. There was widespread relief that Israel chose not to attack Iran’s oil and nuclear infrastructure, and this in turn could give Iran a way out from taking tit-for-tat measures with all the escalation risk such a move would have. So, with oil supply from the region still unaffected, and global demand growth forecast to slow further, it looks as if the path of least resistance is down, at least in the medium term. Front-month WTI could be in the process of completing a near-text book head and shoulders pattern, particularly if prices were to retest the September lows around $65.
