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We see the oil markets eyeing important levels, with Brent crude seeing better buying flow ahead of the 5 August low of $75.05 and WTI crude ahead of $71.67 (also printed on 5 August).
A closing downside break of both levels would firmly cement the thesis that crude is trending strongly lower, and is an out-and-out sellers’ market – and despite Iran easing back on its anticipated retaliation measures, and despite a firm drawer in weekly crude inventory report, the buyers have had absolutely no effect on stabilizing prices.
That said, the recent lows may prove to be big wood for the sellers to chop and given how short the market is positioned in crude, it wouldn’t surprise to see a technical rally play out in the near term.
Crude is here for a reason though, and with gasoline in freefall, the tactical trade would be to sell any oversold technical bounce.
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