Crude Rallies But Market Optimism Fragile

Oil prices rose around a percent on Friday to be about 2% higher on the week, as the market became more positive on the demand outlook following the Fed pause and expected increase from China. It made up the post-Fed losses on Thursday and Friday. WTI has started the week at $71.40/bbl. The USD index was 0.2% higher.

• WTI held above $70/bbl for most of Friday reaching an intraday low of $69.95 and then a high of $71.89. The technical outlook remains bearish, as WTI continues to trade below $75.06, the June 5 high. Support is at $67.03. Brent traded above $75 with a low of $75.08 and a high of $76.74.
• Rosneft CEO Sechin spoke on the weekend and said that underinvestment is likely to lead to shortages of crude. He said that it is getting harder for OPEC+ to agree and that it needs to monitor exports and not just production.
• Hedge fund positions became bearish last week as short positions in US crude increased to a 3-month high, which is likely to annoy Saudi Arabia. Immediate crude demand risks stem from rising inventories and refining outages in the US and Europe.