Oil Markets – Oil Price Today
In what became a relatively no brainer trade of the week, sell oil as London walks in. It is way too early for the EU oil community to turn positive with stricter lockdown measures being enforced left, right, and centre – Oil Price Today: Relatively no brainer trade of the week.
Asia and US traders had a similar depressing take of the oil markets proceeding when they first fell under the Covid-19 lockdown crash.
The trading skew’s psychological impact takes a bit to shake off as vast street elements remain focused on mobility restrictions. But watch for the dip-buying below WTI $40 as indeed it has been a recent pattern to see early weakness in Europe and then recovery as US markets open.
Why does this trade work? Traders remain unwavering that OPEC will continue to defend the downside for oil prices via a more calibrated monthly market evaluation and inventory management approach.
OPEC hopes to tighten near-term balances push spot prices higher than “forward prices,” the elusive backwardation, encouraging inventory draws.
Dip buyers believe until this unambiguously occurs, OPEC will cover the markets back. And positively for OPEC compliance concerns, all the push pump-happy members appear to follow the compensation principles.
The street is not entirely convinced about the Kremlin’s jawboning sincerity overnight. And why would they be after the Presidential debate when both protagonists had a go a Putin.
Indeed, the street remains concerned the Kremlin’s latest “oil put” could be nothing more than an attempt to assuage a market in desperate need of a Covid-19 lifeline and begging OPEC+ not ramp up too quickly, hence the limited price follow-through.
Oil Price Today: Relatively no brainer trade of the week