The Nov WTI trading session settled at 67.67(-2.02) [-2.90%], had a high of 70.01, a low of 66.95. Cash price is at 69.67(-1.91), while open interest for CLX24 is at 337,946. CLX settled below its 7 day (70.18) , its 20 day (70.02), 50 day (73.75), and its 200 day (77.3) moving-averages. The COT report (Futures and Options Summary) as of 9/20 showed commercials with a net short position of -199,037 (a decrease in short positions by 7,981 compared to last week) to non-commercials who are net long 175,128 (a increase in long positions by 247 compared to last week).
Crude held on to the downward momentum we had from yesterday, nosediving nearly 3% and hitting two week lows. The story of the day for crude that seemed, in my opinion, to lead the trade was the Financial Times article (citing unnamed sources) detailing that Saudi Arabia is abandoning its unofficial crude price target of $100 a barrel, in an attempt to increase their market share and sticking with their planned output increase for December. I view this as a classic example of a “Buy the rumor, Sell the fact” situation.
Yesterday’s EIA data showed a draw of -4.5mb, much larger than the forecasted -2.0mb and the previous draw of -1.6mb we had last week. Historically we are ~5% lower than the five year seasonal average. Tuesday’s API report U.S. inventories fell by 4.3mb last week and a further draw of 260,000b at Cushing.
It seems traders are still weighing whether or not China’s new economic stimulus will be enough to get their economy and energy consumption back on track. There was also further speculation this morning that China would announce extra stimulus packages in the coming days/weeks.
Reuters reported that oil platforms in the Gulf for Chevron and Exxon have evacuated staff in the region for Hurricane Helene, which is expected to make landfall tonight in the eastern Gulf as a likely Category 4 hurricane.
Despite the positive API and EIA numbers released this week, concerns about the potential U.S. ports strike starting on October 1, a hurricane in the Gulf, and rising tensions in the Middle East none have seemed to be enough to offset the prevailing sense of global economic downturn and lack of demand for crude oil.
Jim Rinaudo
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Walsh Trading
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