The downfall this week came after Biden ordered the largest release of US strategic reserves yesterday, with 1 mil bpd set to "flood" the market over the next six months.
WTI crude is down over 1% on the day now to below $99, nearing the 29 March low @ $98.54. Key support is still seen closer towards $95 and that is the line in the sand that I'd be watching.
Despite the drop this week, it is best to be reminded that the release of strategic reserves will not do anything to fix the structural issues in the oil market. Yes, sentiment is affected after yesterday but it likely won't be something that lasts.
The market remains tight and I've constantly reiterated the fact that global inventories are low, as also noted by Adam here.
As much as the world economy is set to face a slowdown, it would take quite the demand destruction to really fix the imbalance. For now, that is quite unlikely to take place.
The $95 region would be the first line of defense for buyers but I reckon we could see stronger conviction to defend the $90 level and even more so if there are dips towards the 100-day moving average (red line) near $87 at the moment.
