Any reduction in the geopolitical risk premium allows the market to focus on ample supply and questionable demand. Reports that Libyan rebels claim that a deal to reopen Libyan oil ports added to the bearish sentiment.
Perhaps the most over-hyped and misused phrase in the trading world is “paradigm shift,” yet the proliferation of U.S. energy production has created just that. And it will take the world’s energy producers and consumers a while to get used to it.
The oil market cheered GDP as it already was supported by old man winter. Led by heating oil and gas increases on refinery glitches and winter woes, WTI gained as the emerging market challenged the Brent crude contract.
The petroleum market is trying to assess the impact from emerging issues in emerging markets and rising U.S. oil production ahead of Ben Bernanke's last Fed meeting and ahead of the President's State of the Union address.
Oil traders have to balance demand risks associated with a stock market sell-off vs. the possibility that the Fed may back off tapering after a terrible jobs report. An oversold market and an uncertain stock market may give the bears some pause.