It was another quiet over night session with little data out of the Far East and Europe. Better than expected German IFO data did provide a slight demand bid but it appears any real action will have to wait for today`s U.S. durable goods data.
The old adage proves true, that low prices cure low and crashing prices, and at least in oil, it is always followed by a big time recovery. According to data provided by Price Asset Management, history would suggest that prices of oil usually come back quicker than most people think.
With the Bank of Canada shifting from dovish into neutral territory and oil prices breaking out, we’ve been bullish on the Canadian dollar since last week’s big breakdown in USD/CAD), but the Loonie has actually been showing strength against the other currencies for a couple of weeks now.
For now the energy markets are stuck in a relatively tight range which can tend to lull some to sleep and potentially trick traders into taking risks that are maybe not especially wise for these markets.
Is that what you call ceasing military action? Just hours after Saudi Arabia announced that they would cease military action in Yemen the bombs continued to fall. Crude oil prices, that had fallen in response to the surprise announcement the day before, rallied even in the face of a bearish supply report.
The crude oil market is generally mired in a range as most participants are focused on earnings related data. Yesterday's release of the American Petroleum Institute inventory data didn't do much to push the energy markets out of their recent relatively tight range though all of the data points were modestly bearish showing better than expected builds for crude, gasoline and distillates.
After moving sideways for several trading sessions the crude oil complex made a turn to the downside yesterday and continues on the defensive so far this morning. Since the uptrend started in mid-March the spot WTI contract has increased by about $13 per barrel before stabilizing and then turning lower.