Oil reversal paints a negative picture.
Oil executives have been breathing a sigh of relief in the past few weeks as prices rebounded to $62 from $42 but the fundamentals haven't changed. If anything, the collapse in oil prices is causing less of a production slowdown than analysts expected.
At the same time, Iran is a few months from flooding the global market with oil stockpiles and softer global growth has kept demand in check. The trade, however, is technical. Crude prices have been rebounding for the past six weeks and there was no reason to step in front of the momentum.
Until now.
A three-candle reversal appears to be underway. A close below $58.63 today would confirm it but either way I like the downside. If you draw the downtrend from the start of October (I would prefer it from the June highs), then we're also closing in on the 38.2% retracement. Finally, the modest uptrend since March broke today.
WTI crude daily - look out below