After last week’s ghastly performance, the week has started on the front foot. Oil has re-gained some of its mojo and rallied hard. WTI settled $1.35/bbl and Brent $1.23/bbl higher. One of the chief motivators was the recent weakness itself as some bounce is always due in a market trending southwards, only the timing of it is usually dubious.
Oil prices continue to lag when compared with other strings of the investment instruments. There does seem an inevitability in how immunity sets into the sentiment of the oil fraternity which at present incrementally loses notions of disruption to the oil flows of the Middle East.
The current grim view is underpinned by the lacklustre response to a smorgasbord of seemingly price-supportive developments. The weekly US oil statistics recorded drawdowns across the board. The 7 million bbls decline in commercial inventories indicates that OECD stocks might not build considerably in the last quarter of the year preventing prices from nosediving.
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