In the aftermath of the biggest point drop opening in the history of the stock market open, crude oil today is battling back. As European and U.S. stock markets even as china and Japan markets fall the crude market is trying to make a run higher and get out of the $30 per barrel handle danger zone.
The spot WTI contract held range support and has now moved back to the middle of its trading range on the last day of trading. The soon to be spot April contract has been in a trading range of about $99 on the upside and $95.40 on the lower end.
The oil complex is in a battle between the perception traders, who look for more stimulative measures, and the reality traders, who see the global economy is slowing and demand for oil will continue to decline.
Aside from all of the macro issues sending oil prices lower, supply and demand are more than in balance with a bias toward the oversupplied side of the equation. At the moment oil prices are still being mostly driven by the direction of the euro and the US dollar as well as by a view that the global economy is continuing to slow.
The tensions between Iran and the West have been easing as another meeting will take place tomorrow. As such, expect more market participants to pay attention to this week's round of oil inventory data and thus impact price direction.
The fundamentals of oil are becoming more bearish as the inventories continue to build around the globe. The IEA reported last week that OECD inventories are now above the five year average while crude oil inventories in the US are at the highest level going back to the early 90s.
At the moment oil prices are still being mostly driven by the direction of the euro and the US dollar as well as by a view that China's economy is continuing to slow. The tensions evolving in the Middle East between Iran and the West have been easing as another meeting is scheduled for May.
Yesterday was clearly a so called risk-on day as market participants interpreted Spain's better than expected auction results that all is ok in Europe. The markets remain so interlinked that something as simple was enough to drive just about every risk asset market higher.