Overnight it seems that oil is now worried more about the prospects of the Fed tapering than all other global geopolitical and storm worries. Strong data out of Europe is offsetting concerns from Egypt.
Oil looks heavy while the stock market is in a Fed induced stupor. A rumor overnight of a blast in the Suez Canal was denied by the Egyptian military yet is a reminder that we have seen the market put in a sizable Egyptian premium.
The relatively balanced global fundamental situation has been keeping oil prices under control as the market has been in a short term downward trading channel since breaking through key technical support levels in the middle of February.
The Brent-WTI spread continued to widen due in part to the growing U.S. oil glut but also because of an increase in the geo-political risk trade. Iran dashed hopes that there might actually be progress with the Iranian nuclear soap opera.
With the global economy and oil fundamentals continuing to be the main focus of the trading community, this week's oil inventory report could be a price catalyst if the outcome shows a large deviation from the projections.