OIL WEEKLY ANALYSIS – MARKET SENTIMENT DRIVEN BY CALLS

OIL
WEEKLY ANALYSIS – MARKET SENTIMENT DRIVEN BY CALLS

The
oil market started this trading week recording a new low at 19.29 US$, a level
last seen 18 years ago, with a shadowed and gloomy projection of the global oil
demand falling by more than 20 Mb/d, the yesterday’s rebound in the oil price
could be only temporary relief.

Technical
reading prevails clear bearish bias, oil market tilted towards the upside
yesterday to later closing with a firm rejection and seller pressure right at
the support zone in red. Only this week, the price was able to recover some
lost ground, almost 42%, fighting not only with the support level but
additional finding rejection from the 18 EMA.

Starting
the week, the headlines that capture the spotlight in the energy market were
regarding Trump’s talks with Putin. President Trump spoke with Russian
President Vladimir Putin on Monday, and they agreed to have their top energy
officials to discuss the sliding oil demand. Trump is clearly showing concern
about the price war and direct impact that is already causing in the US oil
rigs.

Later
on, Wednesday report with the surge in the US stockpile inventories by 13.8
million vs. 3.5 million forecasted did not cause the expected selloff as
expected; instead, price closed in green supporting the theory of a broken
global oil market. Storage facilities are filling up, according to Bloomberg.
At the current rates, storage could overflow in just a few months. The physical
oil market has seized up.

The
risk sentiment in the oil market is currently that shallow that even a tweet
from President Trump about his conversation with Saudis and Russians yesterday
moved the market in one day by 28% up to later drop and close with a 17%,
closing in green but signaling a strong seller pressure, again technical
correction as the bearish bias remain to hover the energy sector. With no
confirmation yet on agreements after the talks, the market will close this week
with the skepticism in place.