Quote of the Day
Set your goals high and don’t stop until you get there.
The oil complex is drifting lower in relatively quiet overnight trading and ahead of this morning’s weekly EIA oil inventory report. Last night the API inventory report was mixed with the big surprise showing a 4.9 million draw in distillate fuel oil after a cold spell hit the east coast last week. Today the much anticipated next round of talks between Iran and the west regarding Iran’s nuclear program get underway. The talks are expected to last through the rest of the week. I am still of the view that a deal is very close and an interim deal could get done as early as this week.
From a technical perspective, the Jan WTI contract (NYMEX:CLF14) held its range support level yesterday and actually bounced off of this price to end the session well off of the lows of the day. The soon to be spot Jan WTI contract has been in the $92.85/bbl to $95.50/bbl trading range throughout the month of November. The market has attempted to breach the lower range support level several times unsuccessfully. With the spot Brent contract looking more like it has put in a short term technical top the WTI contract may get the push it needs to breach its range support level.
The Jan Brent/WTI spread has been mostly in a narrowing mode this week as the market seems to be more focused on what could be an improvement in some of the lingering international supply issues rather than focused on the growing surplus of crude oil in the U.S. Several Libyan ports resumed exports yesterday and as I have been discussing for several weeks there could possibly be a deal with Iran that could ultimately lead to more Iranian oil hitting the market in the medium term. The Jan spread is now approaching a test of the $12/bbl technical support level after failing to work its way out of the upper end of the trading range.