June Crude Oil futures posted an inside move last week. This reflected trader indecision or that traders are waiting for fresh information. There was very little reaction this week to the supply and demand reports. Traders seemed to be more focused on the escalating situation in Yemen.
After posting a solid gain the week-ending April 17, crude oil futures settled into a sideways-to-lower trade. The inability to follow-through to the upside after the strong rally gave investors an excuse to pare positions. This led to a steady decline throughout the week. It also was an indication that traders were looking for blow-out news and seemed to be ready to move on from the basic weekly supply and demand data.
The price action from a trader’s perspective was quite normal. With U.S. production expected to continue to decline, it’s just a matter of time before this gets reflected in the supply and demand data. The price action also seems to be saying that now that a slight uptrend has been established, investors may be more willing to buy value than to buy strength.
In other words, during this uptrend buyers are likely to come in on the dips. Any spike moves to the upside will likely be triggered by surprise news and short-covering. This assessment was confirmed on Thursday when crude oil spiked higher on renewed fighting in Yemen.
Last week’s early selling pressure may have been caused by the news that Saudi-Arabia was ending its military campaign…