The big bear oil case consistently has been based on fears of a slowdown in the global economy. The only problem is that, once again, if you look at oil inventories, that case looks a bit flimsy.
Earnings and trade optimism have lifted the S&P back to highs of the week. Although it is flirting above a crucial marker at 3008.50, the NQ trails slightly in relevance to highs set Tuesday and last Thursday.
This is an oil market that has seen significant price declines on slowing growth fears as well as the so-called Saudi oil production recovery.
U.S benchmarks slipped late in the session yesterday after U.K Prime Minister Boris Johnson’s fast-track Brexit deal did not get through the House of Commons.
Oil prices rallied on a Reuters report yesterday saying that OPEC and its allies will consider whether to deepen cuts to crude supply when they next meet in December due to worries about weak demand growth in 2020.
U.S benchmarks started the week off on strong and the S&P extended to one-month highs overnight. A tailwind of positive sentiment comes from Washington and China lauding substantial progress in talks while pointing to the likeliness of an interim deal.
The oil market had one of those meltdowns on Monday’s only set the stage for a turnaround Tuesday. Despite all of the doom and gloom talk, the whisper number on the street may actually give the market a surprise.
The oil market has some big shorts to deal with. Bloomberg News reports that the short position in WTI has almost tripled since mid-September. Still, overnight oil is lacking conviction in two-sided overnight trading with more downticks than up.
U.S benchmarks are shaking off weaker than expected China GDP from last night, the worst in nearly 30 years. Coming in at 6.0% versus 6.1% expected, it’s an ever-present headline reminder of the deteriorating growth conditions around the world.
The U.S. refining system sunk deeper into hibernation as the Energy Information Administration reported that U.S. refineries fell to only 83.1% of their operable capacity last week, the lowest level since 2017.