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Spot Oil moves higher to $43

August 5, 2020

A wide range of minor factors are working together to produce a Crude oil rally.

  • The API showed a healthy inventory draw, confirmed this morning with the DOE showing a -7.4MM Bbl drop
  • Building US Debt is lowering the US Dollar, so a broad-based commodity rally is ensuing.Since May 25th, the USD has lost 7% of its value.
  • US E&P earnings reports are also indicating that they expect flat production going into 2021, so that is also giving the market confidence that US shale will not oversupply the market
  • Technically, we see other factors also supporting the short term picture- there is an absence of (excess) long speculation so the market was unable to follow through to the downside after last Thursday's selloff
  • Market tone is positive, evidenced by an explosion in Beirut which touched on geopolitical fears despite little direct impact to oil supplies


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