Why did the API report that crude supply fell almost 5.0 million barrels and the EIA reported an increase? Part of the reason is a drop in refinery runs and the reclassification of some supply released again from the Strategic Petroleum Reserve.
Even though the S&P 500 still has given me a clear overbought signal, it looks like the momentum to the upside is slowing at these elevated levels near 2430. Oil is really taking it on the chin today, down 4.75%.
It was an active night for global markets, including a terror attack in Iran, the takeover of Banco Popular in Spain--not to mention the American Petroleum Institute Report that showed a big drop in crude supply but big increases in gasoline and distillates.
The crude oil market had a wild ride on the breaking of diplomatic ties with Qatar by a Saudi-led coalition of four countries, Bahrain, the UAE and Egypt. At first, panic ensued as the Qatar stock market tumbled and oil prices soared. Then the oil market reversed on fears that somehow this would break the OPEC supply cut deal.
While it was expected that political risk would continue driving sentiment this week with the UK Election just days away, nobody saw it coming that the main story at the beginning of the week would be the unexpected news that a Saudi-led alliance would cut all diplomatic ties with Qatar.
Crude oil prices are getting a look at terror premium as four Arab Gulf States, led by Saudi Arabia, cut diplomatic ties with Qatar as another terror attack takes place on the streets of London. Terror is becoming a top issue around the globe as ISIS took responsibility for the slaughter on London Bridge.