A large draw in total U.S. crude oil stocks reported by the API late yesterday has resulted in a light round of short covering in a market that remains oversold. As of this morning the crude oil market is still in positive territory but well off of the overnight highs hit after the API data release as the industry awaits the more widely followed EIA oil inventory snapshot.
As OPEC is getting ready to meet next week in what will be their most important meeting in recent memory, it seems that global central bank actions may be doing some of the heavy lifting to support global oil demand expectations.
Crude oil goes into a downside breakout after the International Monetary Fund raised concerns about frothy stock markets and weaker economic growth causing a reaction with stimulus moves by Russia and Norway.
We would not be shocked at all to see the bonds continue to tumble, possibly heading down to 135, if not lower. The upcoming economic data throughout the rest of the year will likely lead the bond market’s direction.