Waiting to Buy the Retreat in Crude Oil, as Goldman Sachs Warns of Shortages
Crude oil has seen the biggest rally in history, with US WTI Oil climbing from $-37.50 about two years ago, when the coronavirus pandemic started, to $93 last week. The global economy, especially manufacturing, has been surging for more than a year, which has been keeping the demand for oil high, and due to the fact that the world is coming out of the pandemic, with the omicron variant being quite mild, the sentiment keeps getting better.
In November, we saw a retreat lower, as the new coronavirus variant spread in China, but the uptrend resumed again, after the worries faded, and moving averages have been doing a great job in every timeframe chart, so we are waiting for the pullback to reach the 50 SMA (yellow) on the H4 chart below.
US Crude Oil H4 Chart
Waiting to buy oil at the 50 SMA
Normally there’s an ebb and flow in nearly every market, but oil isn’t trading like a normal market. It’s been up for seven straight weeks, and even after the easing of Iranian sanctions on civilian nuclear technology over the weekend, the dip was extremely short-lived.
Today WTI Crude fell to $90.73, but it has quickly rebounded to $92.32, which was up fractionally on the day. Goldman Sachs commodity analyst, Jeff Currie, has been touting the bullish case on commodities for a year, and today he delivered some of his starkest comments yet.
He said markets are “incredibly tight from a physical perspective” and warned about shortages of many commodities. “We are out of everything, I don’t care if its oil, gas, coal, copper, aluminum, you name it we’re out of it.” He highlighted ‘super backwardation’ in markets, which is something that looks like declining prices on the futures curve, but it signals that people are pulling commodities out of inventories. “I’ve been doing this 30 years and I’ve never seen markets like this,” Currie said. “This is a molecule crisis.”
WTI Crude Oil Live Chart
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