Crude oil prices gained a bit of upside traction on Tuesday primarily driven by short covering. So far this morning the market is mixed. Nothing has changed on the fundamental outlook for oil with the only positive for the complex being the market remains oversold. The large short positions being held by the spec community is starting to slowly send some players to the sidelines as they book what is likely sizeable profits as the market has been in a downtrend since June.
As I have been discussing, the market is susceptible to further bouts of short covering and are likely to occur before there is another strong push to the downside. That said the global oil market remains bearish with supply still outstripping demand.
Global equities continued their slide overnight with the EMI Global Equity Index falling by 0.32%. The year-to-date gain for the index narrowed to just 0.9% or the lowest level since the middle of January. There are now six of the ten bourses in the Index in negative territory for 2015 with Brazil at the bottom of the list and China still on top of the leader board…even after a strong sell-off in this market earlier in the week. Overall global equities are a negative price driver for the oil and broader commodity complex.