WTI crude settled above its 200-day moving average for the first time since August, a rare victory for bulls this year.

The rally above the 200 dma is improving the technical picture for oil, leaving little in the way of a return to the April high of $83.55. I think that will be more of a challenge than the 200-dma. A break above it would mean a bottom was reached at the start of the year, or at least a wider range up to $95.

Basically, more Chinese stimulus talk is finally making the market believe that something meaningful is coming. OPEC’s big production cuts are also starting to have the desired effect on the physical market. Goldman Sachs’ Daan Struyven said today:

“We expect fairly significant deficits in the second half with deficits of nearly 2 mmb/d in the 3rd quarter as demand hits an all-time high, OPEC+ cuts are implemented and US oil supply .. slows significantly.”

The next driver for the oil market will be weekly inventory data late Tuesday, but a dovish turn by global central banks could also help push out recession-betting oil shorts.