Tuesday's move a trap?
- We had almost 5% gain yesterday mainly driven by comments by the OPEC in its monthly report. chart says the major part of the gains were due to profit taking on shorts.
- Volumes on Tuesday remained very low - well below 50-day moving average level.
- Note, the volumes last Thursday when prices suffered a break from rising were on the of the highest in recent times.
Oil market rebalancing at risk?
Gaurav Sharma, an oil market expert was on our Finance show (https://www.youtube.com/watch?v=7ZQWK2gl9N0) where he presented a compelling case for expecting oil prices to remain within a range of $40-$50.
The message that comes through from Sharma's comments is that a move above recent highs is unlikely any time soon as the glut in the gasoline and distillates has put oil market rebalancing at risk.
However, the resulting downside due glut in the gasoline.distillates and weak global demand growth forecasts should not be beyond $40, unless we have a major banking crisis in Europe.