Oil declines $1 as worth month since October winds down

WTI down $1 to $68.16

The combination of some dollar strength, a bit more caution on risk and tomorrow's OPEC+ meeting is weighing on oil today.

WTI is down $1 to $68.16 but I want to highlight the monthly chart. This looked like it would be the worst month since the start of the pandemic but is now only the worst month since October (and only the second negative month since then).

Importantly, oil looks to be holding above the old 2019 highs and hasn't confirmed a possible reversal signal over three months. The main hurdle remains the October 2018 high of $76.90, which was broken by a few cents last month but will need to be truly busted before the bulls can seriously start talking about $100.

Overall though, this is a constructive looking chart and a reminder of the insane price action in April 2020.

Meanwhile, OPEC's joint monitoring committee's documents are leaking at the moment and see an oil supply deficit of 1.0 mbpd in September, which will fall to 400k bpd by year end. For next year though, they see the oil market in a 2.5 mbpd surplus. Demand growth for this year is unchanged at 6 mbpd.

On OECD stockpiles, they see them rising above the 5-year average from Feb to Dec 2022. This document raises questions about the need to continue hiking production beyond December or January. A 2.5 mbpd could quickly cut down oil prices.

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September 01, 2021 at 01:24AM
Adam Button
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