Crude Oil made quite a reversal on Monday after falling $5 lower, piercing below this year’s low after rumours that OPEC would increase production by 500 barrels/day at their next meeting in December. But, Saudi officials denied those rumours and crude Oil bounce

The 100 SMA rejected US crude Oil yesterday 

We opened a long tern sell Oil signal yesterday at the 100 SMA (green) as it was providing resistance and that moving average rejected the price. Although the 20 SMA (gray) turned into support, stopping the decline, so crue Oil remains stuck between these two moving averages now.

We are keeping a bearish bias on crude Oil despite the strong jump on Monday. The last rally to $94 was followed by a steady decline, which signaled that markets have digested all news and decisions surrounding the conflict in Ukraine and central banks pivoting, adjusting to the new reality and turning into a calmer mode, driven by supply and demand, rather than speculations.

The soaring inflation in the western world, which hit a record high in the EU and the highest in forty years in Great Britain, while price pressures slightly eased in the United States, but still being four times above the 2% target, prompted the major central banks to start raising interest rates to combat inflation. They were giving signals of slowing down, but the actions speak otherwise, with the RBNZ raising rates by 75 bps early this morning.

Although today’s FOMC meeting minutes might have some impact on risk sentiment, so we’ll see when they come out. Before that though, we have the EIA crude inventories being released, which are expected at -2.6 million. But, the private inventories from API yesterday showed a larger drawdown.

Expectations centred on:

• Headline crude -1.1 mn barrels
• Distillates -0.6 mn bbls
• Gasoline +0.4 mn

API Inventories

US WTI Crude Oil Live Chart