Coordinated outing tomorrow
Goldman Sachs came out with a weekend note reaffirming its goal of 85 brent in the fourth quarter and they clearly found like-minded traders today.
Oil stumbled early in North American trade and was once again hit by reports that a coordinated SPR release could arrive as early as tomorrow.
We’ve been hearing the same thing for weeks now and I strongly suspect its price is included. The comprehensive cartel agreement provides for a three-month suspension of planned production increases of 400,000 bpd.
Technically, support at the old high and the 38.2% retracement are tested. If that breaks, we could quickly see $ 73. This is a useful place to switch to buying any SPR title, especially if the US is releasing more than the advertised 30-35 mbpd.
I think a bigger risk for oil is covid. Closures in Europe are not a good sign for anywhere as we enter flu season. I don’t think the effect on consumption is particularly strong, but we saw in the third quarter in the United States that even a country that will remain open despite high cases will see people voluntarily reducing their trips.
In terms of bulls, I think they’re waiting for the headlines from the SPR. The ultimate slap in the face would be for the crude to end up green on the day of the announcement. I wouldn’t bet against it.
WTI settled today up 81 cents to $ 76.75.
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