WTI: Little chances to break the $37-$42 range – TDS
|WTI Oil has been flirting with the $40 level after Crude Oil Inventories showed a minor increase of 0.5 million barrels, worse than expected. Bart Melek, Head of Commodity Strategy at TD Securities, notes that tough support is seen at $37 while stubborn resistance awaits at $42.
Key quotes
“Following an upbeat week, crude oil stocks unexpectedly started to increase once again – posting a 0.5 million bbls build vs an expected draw of 1.2 million. Distillate stocks fell 0.96 million, which was roughly in line with the expected 1.1 million bbls decline by the market. In sharp contrast, gasoline inventories dropped 1.4 million bbls vs a 0.5 million expected reduction.”
“Given that the US and global demand recovery is likely to be somewhat slower than previously thought and considering that OPEC+ is not firmly signaling that it will postpone (or promise additional cuts if needed) its planned increase in shipments starting in January, crude oil will likely be under pressure. However, since investors are already positioned short and given there will be a vaccine, new fiscal spending after the election on the horizon and considering that there is a storm raging in the US Gulf, the downside is likely to be limited.”
“The upside is also well constrained. We judge there is good technical support near $37/bbl, with strong resistance near $42/bbl.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.