The Crude Chronicles – Episode 36

<h2>Crude Long Positions Building</h2>
<p>The CFTC COT positioning report showed that large speculators and hedge-funds (non-commercials) increased their positions in WTI last week by 76,511 contracts to a total position of 587,180 contracts. This brings the net long position back up to its highest level in over 18 months despite the recent rout in oil prices which saw the continuous futures contract turn negative last week for the first time in history.</p>
<p>WTI oil prices are on course to register their first positive week in 11 weeks following a recovery over the last few sessions. Global investor appetite has been firmer this week, with equities and commodities prices driving higher amidst the ongoing inflow of central bank cash, helping lend oil some support.</p>
<h2>Fed Crushes Dollar</h2>
<p>At the FOMC yesterday, the Fed delivered a dire warning for markets acknowledging the severe medium-term risks from COVID-19 which they said might warrant further action. At the very least, rates will remain at current record low levels for some time as the hit to economic activity is expected to worsen over Q2.  Yesterday, US Q1 GDP printed -4.8%, worse than the expected -4%, marking the sharpest decline in over a decade. The US dollar has been sent lower this week in the wake of the latest message from the Fed which is also helping boost oil prices.</p>
<h2>EIA Reports Less-Than-Expected Inventories Build</h2>
<p>The latest update from the Energy Information Administration offered some relief for WTI bulls also as the group reported a less-than-expected surplus of 9 million barrels last week. This was against the expectations of a 10.6 million barrel increase. Furthermore, news of a draw-down in US gasoline stocks, the first such instance in over a month, has also helped buffer against further declines here.</p>
<p>Within the COVID-19 context, the key now will be the pace of the global recovery as countries start to ease lock-downs or make plans to do so. With the loss of demand from industrial and aviation sectors providing the largest drag to oil prices, traders will be monitoring developments within these sectors closely over the coming weeks and months.</p>
<h2>Technical Views</h2>
<p><strong>CRUDE OIL (Bullish Above $17.10)</strong></p>
<p>From a technical viewpoint. The rally in oil this week has seen price trading back up to retest the $17.10 level structural resistance as well as the bearish trend line from earlier-2020 lows. This is a key region for oil and a break higher here will put the $26.05 level back on the radar. However, with VWAP still negative, downside risks remain and if price can’t break the current resistance, a rotation back down towards the $9.65 level looks likely.</p>
<p><img class="aligncenter wp-image-42716 size-full" title="The Crude Chronicles – Episode 36" src="http://blog.tickmill.com/wp-content/uploads/2020/04/crude-3.png" alt="The Crude Chronicles – Episode 36" width="1217" height="605" srcset="https://blog.tickmill.com/wp-content/uploads/2020/04/crude-3.png 1217w, https://blog.tickmill.com/wp-content/uploads/2020/04/crude-3-300×149.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/04/crude-3-1024×509.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/04/crude-3-768×382.png 768w" sizes="(max-width: 1217px) 100vw, 1217px" /></p>
<p><strong><i>Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.</i></strong></p>
<p><strong><i>High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% and 70% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.</i></strong></p>
<p>The post <a rel="nofollow" href="https://blog.tickmill.com/fund-analysis/the-crude-chronicles-episode-36/">The Crude Chronicles – Episode 36</a> appeared first on <a rel="nofollow" href="https://blog.tickmill.com">Tickmill</a>.</p>