Crude oil prices were mixed with Brent ending Tuesday’s session lower while the spot WTI contract was able to hold onto a small gain. In a market that remains dominated by bearish fundamental data points the crude oil markets have been in a short term uptrend since the middle of March, mostly driven by a strong round of profit taking selling in the U.S. dollar. The USD has declined fairly consistently since the middle of March acting as short term support for the oil complex.
I remain of the view that the oil complex may have further to fall before entering into a sustainable uptrend. The only bullish date point is the 48% decline in US oil rigs since October 10. However, U.S. crude oil production has continued to steadily rise. At some point production will tail off but based on the latest projections by the EIA the decline expected during Q3 will be shallow and short lived.
As of now I do not see any significant oil production cuts coming from anywhere in the world anytime soon. OPEC continues to reiterate that they have no plans to change their strategy of holding production steady as the June OPEC meeting approaches. Absent a cut in OPEC production I do not see oil prices entering into a strong uptrend in the foreseeable future.
Global equities drifted slightly lower over the last twenty four hours. The EMI Global Equity index declined by just 0.18% resulting in the year to date gain narrowing slightly to 6.3%. The ranking among the ten bourses in the Index remains the same with Germany on top and the US Dow holding the bottom spot but still slightly positive for 2015. Overall global equities have been mostly a neutral for the current week to date.