Oil shorts squeezed hard

WTI crude is up $2.30, or 5.3%, to $45.50 today.

A few headlines are floating around the oil market.

  1. Today's US inventory report showed a slightly small supply build (bearish)
  2. Iran talked about pumping more after sanctions (bullish)
  3. Efforts to convince non-OPEC members to curb production have been abandoned (bullish)
  4. Thin liquidity

I suspect positioning is the greatest part of the equation. In a trending market the trend is like an escalator and the retracements are like an elevator. That's why the move in oil has been so harsh today after declines in 6 of 7 days.

The move in oil has hit USD/CAD hard as part of broader dip in the US dollar ahead of the Fed. The market is leaning hard towards a dovish FOMC statement at 2 pm ET.

Technically, a close here or a bit below would form a bearish reversal candle on the daily chart.

...but it's still a long way until the close with the Fed decision looming.