The oil market ended last week at a technical boundary with crude flirting with the 200-day moving average. It then retreated at today’s open, falling 50 cents in early trading in what appeared to be a rejection.
However, sentiment has changed despite weak PMIs globally and WTI crude is now up $1.21 at $78.27, the most since April and the first rise above the 200-day moving average since August.
I highlighted the crowded short positioning in oil, which earlier this month was the most negative since 2020. The rally from the bottom looked like a short squeeze, and a rise above the 200-dma will certainly add to that momentum. If we get to it today, it shouldn’t take too long for oil to reach the April high of $83.73, but watch out for headlines about whether Saudi Arabia will extend its voluntary oil cuts into September.