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Oil has softened over the last few trading sessions
WTI Oil futures have generally traded lower over the past few days. After making a double top around the $102 handle at the end of last week we have since sold off, trading as low as $97.40 on Monday. This was just below the previous January low around $97.70 and proved to be support initially, bouncing back up to around $100. This bounce proved short lived though and we are now back trading in the low $98’s. The market still hasn’t closed below $97.50 - a key area we mentioned last week if we were to move lower.
Iran Embargo fails to awaken bulls
The EU confirmed this week that it would impose a ban on Iranian Oil - a move which today was echoed by the Australian government. This failed to bring the bulls out of hiding which could be a sign that this current run is a short term top. This sentiment was perhaps helped by Saudi Arabia announcing that they would keep plenty of Oil flowing and should be able to cover any shortfall from a lack of Iranian Oil.
Technical Outlook
Technically, March Crude has failed to make a meaningful break higher above the $103.40-70 range and has since reversed and dipped lower. In the short term, $97.50 remains key and a close below here should lead to further losses. This move should take us to $95.20 initially. The $95 handle may well be important in the term - a close below here on the daily chart may lead to a test of the low $90’s in the near future.
Inventory data
Last night saw the API number release, with a massive build showing in the Oil inventories of 7331k barrels. There was a small draw down in Gasoline inventories of 573k barrels but the big news was obviously the Oil build. This sent WTI lower by about 30 ticks on the immediate reaction, before trending lower throughout the night. Expectations for the DOE release are for a build in Oil stocks of 1450k barrels, and a build in gasoline stocks of 2000k barrels. If we continue to see big builds over the next few weeks this is likely to weigh on WTI.
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