Not too much has changed in the oil market really; all we are getting is more details on the issues that have been highlighted previously. Portfolio managers have apparently sold the equivalent of 553m barrels of crude and fuels in the last seven weeks, the largest reduction over a comparable period since at least 2013.
You really can’t have a market rally without the support of the financials, but at the moment it seems that they are reticent to get back in on this market. With that in mind there could be an overreaction to whatever comes next.
By this we mean, if OPEC agrees a significant cut with the support of Russia, the market could suddenly buy it back and catapult prices way over where the market should be. Vice versa, if no agreement is reached and OPEC kicks the can down the road to its next meeting, whoomph, down to $60 and all the bottom feeders will come out of the dark corners of the market. Little gremlin-like beings who will start buying a little here and a little there – oops, missed the drop and we are already halfway back up towards $70.
Technically speaking, we really have come down to a level which is looking oversold, so it seems that we will see some people getting in at this level and any further movement downwards stopped by stiff market support.
Source: Freight Investor Services
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