Yesterday's turbulent price moves in the oil complex point to not only a thinned trading populace but one that is seeing faith drain from those that have remained loyal to the bullish cause. Crude futures have now lost around 5% of value in 3-trading sessions.
The optimism about the health of the global and US economy appears unbroken. A Fed rate cut in September is fully priced in with a split of 25%/75% for 50bps/25bps, the CME FedWatch tool implies. Equities are rallying. The Nasdaq Composite Index gained 14% since the early August low including yesterday’s advance of 1.39%.
Last week was something of topsy turvy one. Eventually, and unlike the wider suite, the oil market was not able to extract itself from being besotted by the Middle East, at times pushed on by the hope in equities, only to be finally sat down in an unchanged fashion by China.
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