The Crude Chronicles – Episode 51

<h2>Crude Oil Longs Rise</h2>
<p>The latest CFTC COT positioning report shows that WTI traders increased their net long positions in the oil market last week by 3697 contracts, taking the total position to 536, 266 contracts, bringing positions further up off the three-month low.</p>
<p>This latest increase in upside positioning reflects the healthy risk environment we are seeing at the moment, despite increasing second wave fears. While the market is certainly aware of the developing second wave taking place globally, with individual countries seeming unlikely to impose national lockdowns again, instead opting for local lockdowns, for now it seems the impact on risk appetite is minimised. With central banks locked into easing regimes and constantly reassuring the market of their willingness to do more, for now, risk assets remains well supported, keeping oil bid at highs here.</p>
<h2>Third Weekly EIA Inventories Decline</h2>
<p>The latest weekly update from the Energy Information Administration in the US is also helping keep oil demand strong here. The EIA reported a third consecutive weekly drawdown in SU crude oil inventories last week. Notably, the decline was also accompanied by a fall in gasoline inventories which is endorsing the view that the US economic recovery is starting to gather pace.</p>
<h2>OPEC Cuts Global Demand Forecasts</h2>
<p>There are some downside risks, however. OPEC updated its oil market outlook this week and concluded that global oil demand is forecast to drop by 9.1 million barrels per day over this year, worse than initially thought. With OPEC+ nations beginning to ease out of production restrictions this week, there is a risk that a market imbalance starts to reappear, which could weigh on oil prices. This situation could be particularly damaging for oil prices if second wave fears intensify and demand starts to trail off again.</p>
<p>Moves in the US Dollar have also helped keep oil prices well bid here. The greenback has been under steady selling pressure over the last three months. While there has been a pause over recent weeks, USD remains under pressure and a return to selling this week has helped commodities prices bid, benefitting oil.</p>
<h2>Technical Views</h2>
<p><strong>WTI (Bullish above $41.35)</strong></p>
<p>From a technical viewpoint. Volatility in the oil market has turned anaemic over recent weeks. Price spent much of the last six weeks trading very lightly around the $41.25 level resistance. With price now sitting just atop the level, the near-term outlook remains bullish. However, given the drop off in momentum, a correction lower cannot be ruled out and should we see any downside moves, bulls will be looking to defend the $29.14 level.</p>
<p><img class="aligncenter wp-image-48619 size-full" title="The Crude Chronicles – Episode 51 " src="http://blog.tickmill.com/wp-content/uploads/2020/08/Screenshot-2020-08-13-at-08.51.57.png" alt="The Crude Chronicles – Episode 51 " width="2652" height="1576" srcset="https://blog.tickmill.com/wp-content/uploads/2020/08/Screenshot-2020-08-13-at-08.51.57.png 2652w, https://blog.tickmill.com/wp-content/uploads/2020/08/Screenshot-2020-08-13-at-08.51.57-300×178.png 300w, https://blog.tickmill.com/wp-content/uploads/2020/08/Screenshot-2020-08-13-at-08.51.57-1024×609.png 1024w, https://blog.tickmill.com/wp-content/uploads/2020/08/Screenshot-2020-08-13-at-08.51.57-768×456.png 768w, https://blog.tickmill.com/wp-content/uploads/2020/08/Screenshot-2020-08-13-at-08.51.57-1536×913.png 1536w, https://blog.tickmill.com/wp-content/uploads/2020/08/Screenshot-2020-08-13-at-08.51.57-2048×1217.png 2048w" sizes="(max-width: 2652px) 100vw, 2652px" /></p>
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