WTI Crude Dips Amid Geopolitical Calm, But Upside Risk Looms for the Week

Oil - 2 pumpjacks at sunset by vadimrysev via iStock
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Bloomberg 

Last week’s close: Settled at 75.56, down 0.29 [-0.38%] on Friday and up 1.18 on the week [+1.58%]

WTI Crude Oil Futures are lower by -1.56 [-2.08%] this morning. The weekend came and went without major Israeli strikes on Iranian assets, which has resulted in risk-premia extraction from oil markets this morning. 

Chinese stimulus was announced on Friday night, including income assistance to the lower class, support for the fledgling construction sector, and plans to recapitalize the nation’s banking system. While the latest announcement has driven a risk-on trade for on-shore Chinese stocks and listed commodities, global markets are trading relatively disappointed. The disappointment, cited by some analysts, comes from the lack of direct numbers and support details. The country’s economic data released last night also remained weak. 

Our view on risk for the week in the crude complex is skewed to the upside. Reports are that Israel has narrowed targets to either Iranian military or energy assets, and the dollar is approaching overbought levels in the short/medium term. Also, the Commitment of Traders report issued Friday leans relatively bullish while WTI November futures are nearing support levels. While we caution against aggressive positioning at these levels, our view still remains that risk is skewed to the upside for the week. Having said that, selling may continue to start this week, and patience should be used when placing buy levels. 

WTI Crude Oil futures are under pressure and testing into a pocket of support at…

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