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OIL: Crude Rebounds Given Outages And Fed Rate Cut Expectations

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Oil prices rose sharply on Monday as the failure to reach a deal in Libya offset ongoing concerns about the strength of China’s economy. Expectations of a possible 50bp Fed rate cut on Wednesday and the accompanying softer US dollar also provided support (USD BBDXY index -0.3%). 

  • WTI rose 2.7% to $70.50/bbl after a high of $70.70 but is still 4.2% lower in September. It is currently down slightly at $70.44. Initial resistance is at $71.06, 20-day EMA, and support at $65.27, September 10 low.
  • Brent is up 1.9% to $73.00/bbl to be down 5.1% on the month. It reached a high of $73.39. The recent recovery is still seen as corrective, while the trend condition remains bearish with lower lows and lower highs. The downtrend is in oversold territory and a stronger rebound would allow this to unwind. The bear trigger is at $68.68 and initial resistance at $74.30, 20-day EMA.
  • Libyan output in the east of the country was halted in protest at the central bank managing the country’s oil revenues. The UN failed to get the two governments to agree on a deal to solve the dispute which drove the rally in oil prices. Crude exports fell to 314kbd last week down from 468kbd in the first five days of September, according to Bloomberg tanker tracker data.
  • US Gulf of Mexico output continues to be impacted by Hurricane Francine with around 12% still shut in, according to the Bureau of Safety and Environmental Enforcement.
  • Despite yesterday’s rally, the market is bearish on crude with money market positioning net short for the first time since data began in 2011, according to Bloomberg.
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Oil prices rose sharply on Monday as the failure to reach a deal in Libya offset ongoing concerns about the strength of China’s economy. Expectations of a possible 50bp Fed rate cut on Wednesday and the accompanying softer US dollar also provided support (USD BBDXY index -0.3%). 

  • WTI rose 2.7% to $70.50/bbl after a high of $70.70 but is still 4.2% lower in September. It is currently down slightly at $70.44. Initial resistance is at $71.06, 20-day EMA, and support at $65.27, September 10 low.
  • Brent is up 1.9% to $73.00/bbl to be down 5.1% on the month. It reached a high of $73.39. The recent recovery is still seen as corrective, while the trend condition remains bearish with lower lows and lower highs. The downtrend is in oversold territory and a stronger rebound would allow this to unwind. The bear trigger is at $68.68 and initial resistance at $74.30, 20-day EMA.
  • Libyan output in the east of the country was halted in protest at the central bank managing the country’s oil revenues. The UN failed to get the two governments to agree on a deal to solve the dispute which drove the rally in oil prices. Crude exports fell to 314kbd last week down from 468kbd in the first five days of September, according to Bloomberg tanker tracker data.
  • US Gulf of Mexico output continues to be impacted by Hurricane Francine with around 12% still shut in, according to the Bureau of Safety and Environmental Enforcement.
  • Despite yesterday’s rally, the market is bearish on crude with money market positioning net short for the first time since data began in 2011, according to Bloomberg.