WTI Crude Oil (November)
Yesterday’s Close: Settled at 71.16, up +1.28
The WTI November contract is trading around 71.65 this morning and is lower by -0.46 from yesterday’s settle.
WTI’s move higher yesterday was driven by a global risk-on trade that was broad-based and significant. Risk assets moved sharply lower immediately following Wednesday's Fed move, but pivoted on the Asian open Wednesday night. Risk-on price action carried through the entirety of the U.S. session yesterday which helped drive crude higher.
Geopolitical risk premia has also aided this week’s rally, as more pager/walkie-talkie attacks in Lebanon were reported yesterday.
The Chinese central bank held rates steady last night, but optimism towards impending stimulus is improving. Chatter within the markets this morning is that the Fed’s move lower may give China more wiggle room to enact stimulus as the lower rates will create less pressure on their currency.
WTI futures have printed seven straight positive days prior to today, and this week is set to print the largest weekly rise in oil prices since February.
Traders should keep close tabs on this positive rhetoric around Chinese stimulus. While chatter about stimulus has come and gone over the past two years, the Fed shift could change things. If Chinese stimulus does come down the pipeline, oil market fundamentals could shift quickly to the bull side.
In the short-term, we are neutral at these levels today through early next week. In the medium / longer term, the view continues to trend bullish.
WTI Crude Oil futures directly hit our rare major four-star resistance at 71.15-71.55 yesterday and retreated immediately. If you have followed our shift to more Bullish Bias, it would be (or would have been) prudent to monetize the move to some degree against such a critical area of resistance. Still, we find the path constructive and remain bullish/upbeat over the intermediate and long-term. Furthermore, holding out above first key support at...
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