Oil’s Drift Higher Lacks Momentum

Brent led WTI higher overnight but producer hedging and a very long speculative market highlight a lack of momentum.

Both Brent and WTI enjoyed a positive overnight session, but Brent was the clear winner, rising 2.0%  with WTI a comparative laggard at +1.30%. Brent benefited from forceful Saudi comments that bit was determined to end the global supply glut as well as lingering worries about disruptions from US/Iran relations as well as Iraqi Kurdistan instability. WTI is less affected by such things, but it was boosted by a massive gasoline draw of 5.753 million barrels from the American Petroleum Institute’s (API) Crude Inventory data.

As the dust settles though, a realistic outlook is that both contracts have only moved back to the top end of their recent one-week trading ranges. Both Brent and WTI while looking technically constructive, have yet to test critical resistance levels that lie just above comprehensively. One suspects that shale oil producer hedging in both contracts may be capping potential gains and the street may need new reasons to give the rally in both new impetuses.


Brent spot is trading unchanged at 52.45 today with four multi-day highs lying just above each side of 52.50. Above there is the  September high at 59.10 meaning at these levels Brent has some wood to chop before the street can start thinking of a test of 60.00. The rising support line of the last two weeks comes in at 57.15 this morning followed by 55.95 and then the long-term support line at 55.60.

Brent Daily

WTI spot trades at its overnight highs of 52.25 this morning, but it has ground to a halt in this region six times over the last fortnight. Implying that the producer hedging is alive and well. The nest resistance is nearby at 52.50 before we arrive at the far more formidable 53.50/54.50 longer-term resistance zone. Initial support is at 51.20 with a break of the 50.00 area suggesting the rally will have run its course in the short term.

WTI Daily

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Jeffrey Halley

Jeffrey Halley

Senior Market Analyst, Asia Pacific, from 2016 to August 2022
With more than 30 years of FX experience – from spot/margin trading and NDFs through to currency options and futures – Jeffrey Halley was OANDA’s Senior Market Analyst for Asia Pacific, responsible for providing timely and relevant macro analysis covering a wide range of asset classes. He has previously worked with leading institutions such as Saxo Capital Markets, DynexCorp Currency Portfolio Management, IG, IFX, Fimat Internationale Banque, HSBC and Barclays. A highly sought-after analyst, Jeffrey has appeared on a wide range of global news channels including Bloomberg, BBC, Reuters, CNBC, MSN, Sky TV and Channel News Asia as well as in leading print publications such as The New York Times and The Wall Street Journal, among others. He was born in New Zealand and holds an MBA from the Cass Business School.
Jeffrey Halley
Jeffrey Halley

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