Co-ordinated release tomorrow
Goldman Sachs was out with a weekend note re-affirming its $85 brent Q4 target and they clearly found some like-minded traders today.
Oil stumbled early in North American trading and was hit again on reports a coordinated SPR release could come as soon as tomorrow.
We've been hearing the same thing for weeks now and I highly suspect it's priced in. Perhaps more-newsworthy is that OPEC+ said it could respond to the move with curbs of its own. The broad cartel deal has provisions for a three-month suspension of planned 400k bpd increases in production.
In terms of the technicals, support at the old high and the 38.2% retracement is being tested. If that breaks, we could quickly see $73. That's a useful spot to scale into longs on any SPR headline, particularly if the US releases more than the 30-35 mbpd rumored.
I think a larger risk to oil is covid. The lockdowns in Europe are not a good sign for anywhere as we enter flu season. I don't think the effect on consumption is particularly high but we saw in Q3 in the US that even a country that will remain open despite high cases will see people voluntarily cut down on travel.
In terms of bulls, I think they're waiting for the SPR headlines. The ultimate slap in the face would be if crude finished green on the day of the announcement. I wouldn't bet against it.
WTI settled today up 81-cents to $76.75.
