Today's oil price action has me confounded. Anecdotally - I'll perform the analysis afterwards, just want to get my thoughts down, it's been quite some time since we've seen intraday reversals, downside momentum into the NYMEX close and sizeable post-NYMEX close moves lower.
While, a bull case macro story doesn't exist, you have to trade the market you're given. Each of the recent spikes higher has been purely technical, based on short-term over-sold conditions.
The 10/28 move higher broke through the important level of $45 and has since seen consolidation above $46. This is definitely bullish. For the first half of Tuesday's US session oil was having real trouble holding a $47 handle. Then voila, 1pm brought a 2% spike higher. Bullish. Momentum turned over into the NYMEX close and through the API print, which showed a slightly larger than expected build in crude stocks of +2.8mm, down from +8.1mm last week. Again, we saw weakness in futures on the public release. Bearish. Overnight, we're set to receive European PMIs (mostly services, but we'll see German and EZ composite figures), which are expected to continue to show accelerating weakness. Bearish.
Oil's recent push higher has seen a decoupling from Euro and a much higher correlation to SPX.
Conventionally, SPX looks very overbought, which doesn't bode well for higher oil prices. Bearish. I don't see SPX rolling over for at least another 30pts. Bullish
Was today's move higher a head-fake? Could be. I exited my puts this morning and am long calls. I'll be back to update with some data analysis shortly. But for now, I'm still sitting long.
While, a bull case macro story doesn't exist, you have to trade the market you're given. Each of the recent spikes higher has been purely technical, based on short-term over-sold conditions.
The 10/28 move higher broke through the important level of $45 and has since seen consolidation above $46. This is definitely bullish. For the first half of Tuesday's US session oil was having real trouble holding a $47 handle. Then voila, 1pm brought a 2% spike higher. Bullish. Momentum turned over into the NYMEX close and through the API print, which showed a slightly larger than expected build in crude stocks of +2.8mm, down from +8.1mm last week. Again, we saw weakness in futures on the public release. Bearish. Overnight, we're set to receive European PMIs (mostly services, but we'll see German and EZ composite figures), which are expected to continue to show accelerating weakness. Bearish.
Oil's recent push higher has seen a decoupling from Euro and a much higher correlation to SPX.
Was today's move higher a head-fake? Could be. I exited my puts this morning and am long calls. I'll be back to update with some data analysis shortly. But for now, I'm still sitting long.
