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.”
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FXStreet Team
FXStreet
