After attempting to breakout through the upper range resistance level, all of the commodities in the oil complex failed and have been in retreat mode since early yesterday and into this morning so far.
Is the worst of the risk asset selling over or was Tuesday’s trading activity just a bit of short covering rally in a broader downtrend that is just getting underway? The market sentiment tends to quickly react to changes in the status of the global economy.
After a few days of short covering the oil complex is starting today’s session on the defensive after a bearish API fundamental snapshot along with a weak demand projection by the EIA in their monthly Short Term Energy Outlook report.
Oil prices fluctuated yesterday on lots of news and lots of supply. An earthquake in Iran gave oil a pop, but after the close the American Petroleum Institute reported a whopping 5.1 million build in crude oil supply.
Oil prices are drifting lower ahead of this morning’s EIA oil inventory report and after the API reported a much larger than expected build in crude oil but partially offset by a larger than expected draw in gasoline stocks.