Oil continues to benefit from swelling economic optimism and has made a quick move from $68 to $80.
Earlier today it first rose above $80 before falling back to $79.03 on profit-taking and USD strength but it's regained its footing and is back near the highs of the day.
The next big question is whether Saudi Arabia will prolong its 500,000 barrels per day voluntary production cut that's on top of mandatory OPEC+ cuts. I would have thought an extension is priced into the market (oil bulls are talking about an extension through year end) but perhaps it's not priced in: A Bloomberg poll today found that 15 of 22 analysts expect it to be extended to September.
That's a solid majority but the remaining 7 of 22 analysts is a significant majority and that indicates there is some uncertainty. The previous extension came early in July so we will probably have to wait until next week to find out or until after the JCPOA meeting on August 4. One possibility is a taper to something like 250,000 barrels per day.
For now though, expectations for Chinese stimulus and better US growth are a big tailwind. Technically, the April high of $83.53 is resistance but this week's break above the 200-day moving average is bullish.
