It was looking awfully grim in the oil market last week as WTI crude fell through the summer lows to the worst levels since early February. What was particularly damaging is that it was coming at a time of positive risk appetite.
But oil has bounced back in three strong days of gains, including a 3.5% rally today and at $77.48, it’s now just below the 200-day moving average and in the middle of the summer range.
WTI daily with 200dma
The caveat today is that the rally was entirely driven by Libya shutting down production and exports. That could (and eventually will) reverse put the crude market back to where it was.
From here, oil will need to get above the August high of $80.15 to put a squeeze on the crowded short positions. That could be tough with seasonals a drag from now through November.
