Oil rises as Ramadi falls as this markets price action continues to defy the calls for an oil price crash. ISIS forced Iraqi security forces to flee the largest province in Iraq despite help from U.S. air support.
Outside of individual's holding crude oil stocks, damage to the economy from the fall in oil has been pretty minimal so far. Indeed, the price cut in home heating oil and gasoline has probably outweighed the damage from lower oil prices, so far. Unfortunately, this situation may not last.
Crude oil prices continue to struggle to the upside as the first snapshot of fundamentals this week--the API inventory report--was mostly bearish. The more widely followed oil inventory report is due out at 10:30 a.m. EST this morning which is expected to show an across the board build in the complex.
After moving sideways for several trading sessions the crude oil complex made a turn to the downside yesterday and continues on the defensive so far this morning. Since the uptrend started in mid-March the spot WTI contract has increased by about $13 per barrel before stabilizing and then turning lower.
The dollar’s relationship with commodities was in full force last week. The sharp increase in the price of oil (up more than 10% since April 8) was in stark contrast to the dollar, which fell sharply against its G10 counterparts, as you can see in the chart below.