Oil Price - April 9

[dan_s]

FEAR of a "Trade War" with China has been a dark cloud over the stock market and oil prices. My experience is that fears of the unknown are much worse than reality. "Reality" is that we are just beginning a long period where demand for oil will exceed supply. IEA predicts it and will reinforce their forecast with another month of hard data when they publish their monthly Oil Market Report next week. - Dan

Oil prices rallied to start the week on Monday, as traders again shook off concerns about a U.S.-China trade war, at least for now.

Attention now turns to China’s Boao Forum - the so-called Asian Davos - where Chinese President Xi Jinping will make a much-anticipated speech on Tuesday, which traders are watching for any reference to the trade dispute with the U.S.

The U.S. and China are the world’s two largest oil consuming nations.

U.S. West Texas Intermediate crude futures jumped $1.03, or 1.7%, to $63.08 a barrel by 10:10AM ET (1410GMT). The U.S. benchmark lost about 4.4% last week, its biggest such decline since the week ended Feb. 9. < As I pointed out in my podcast, a keep support level held ($62) and there are two more support levels below that. Since demand for oil exceeds supply TODAY, the fundamentals point to higher oil prices. - Dan

Oil prices finished lower on Friday to tally their worst weekly loss in two months as investors fled riskier assets amid fears that deteriorating trade relations between the U.S. and China could deal a blow to global growth. Sentiment took another hit after General Electric (NYSE:GE)'s Baker Hughes energy services firm said in its closely followed report on Friday that the number of oil drilling rigs rose by 10 to 808 last week. < GE reported a decline of 7 rigs the week before.

Domestic oil production - driven by shale extraction - rose to an all-time high of 10.46 million bpd last week, the Energy Information Administration (EIA) said, staying above Saudi Arabia's output levels and within reach of Russia, the world's biggest crude producer. Analysts and traders have recently warned that booming U.S. shale oil production could potentially derail OPEC's effort to end a supply glut. < Demand for oil will exceed supply growth by at least 5X in April and demand growth will continue to exceed supply growth in May and June. Refiners have a lot of work to do this spring because U.S. inventories of transportation fuels are very low for this time of year. We never really recovered from Hurricane Harvey. - Dan

Market players will also focus on monthly reports from the Organization of Petroleum Exporting Counties and the International Energy Agency on Thursday and Friday to assess global oil supply and demand levels. Comments from global oil producers for additional signals on whether they plan to extend their current production-cut agreement into next year will also remain on the forefront.

[dan_s]

Crude Oil bulls took control at the start of the trading week by taking the price of Crude higher by the most in two weeks. A key backdrop of the rise has been the weakening US Dollar as well as the potential that Iran sanctions may be around the corner limiting global supply on the back of US President Donald Trump accusing Russia and Iran in aiding Syria’s president in the most recent gas attacks. "Without a sharp break below $60/bbl (spot at $63.40/bbl), traders should anticipate a resumption to the 2018 high of $66.58, and a potential push higher still beyond $66.58." < This is what I have been saying in my weekly podcasts for over a month.

https://www.dailyfx.com/forex/technical ... ysis:usoil

[dan_s]

Watch the daily update on the oil market from CME Group here: http://www.cmegroup.com/trading/energy/ ... crude.html

Alan says if traders take out resistance at $66/bbl for WTI, there is a clear path to $75.

MY TAKE: Trump rips up the Iranian Nuke Deal and puts new sanctions on Iran. That should do the trick. Regardless, demand for oil will exceed supply from here until year-end. IEA will confirm this in next week's "Oil Market Report".