Oil Price - Sept 19

[dan_s]

Oil prices finished sharply higher Wednesday after a U.S. government report revealed a weekly fall in crude supplies, the fifth weekly decline in a row. Expectations for further declines in exports from Iran, ahead of the implementation of U.S. oil sanctions on the country in November, also contributed to the price climb. October West Texas Intermediate oil rose $1.27, or 1.8%, to settle at $71.12 a barrel on the New York Mercantile Exchange. That was the highest close for a front-month contract since July 10, according to FactSet data.

If the front month NYMEX contract (October) for West Texas Intermediate (WTI) settles over $70/bbl in the next few days, we have "probably" moved into Phase 4B of "The Rebound". I've broken Phase 4 into A and B because $70 proved to be a very strong resistance level. Once broken (we won't know for several days), strong resistance levels usually become strong support levels.

Phase 4B is $70 to $75. On the charts, there is not much resistance between $70 and $75, so it will not take much to get to $75 (IMHO of course). Falling exports from Iran are creating an extremely tight global oil market. OECD inventories are falling by AT LEAST 500,000 barrels per day as long as the sanctions against Iran are in place. OECD inventories may fall by a million barrels per day after November 4 when the full impact of the U.S. sanctions go into effect. There is no indications that Trump is backing down.

WTI tested $75 back in early July as you can see here: https://www.tradingview.com/chart/wBMe44ta/
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Keep in mind that Hurricane Florence will have some impact on the next two weekly storage reports. It probably had more of an impact on natural gas demand than on supply/demand for liquids.