U.S. West Texas Intermediate and international-benchmark Brent crude oil posted a two-sided trade this week before closing lower. This week’s trade pitted the bullish traders, who believe the OPEC-led production cuts that are helping to trim supply and stabilize prices, would be extended beyond 2018 and into 2019 against the bearish traders who are banking on rising U.S. production to thwart the coalition’s strategy.
For the week, May WTI crude oil settled at $64.94, down $0.94 or -1.43% and June Brent crude oil finished at $69.34, down $0.47 or -0.67%.
This week’s trade started on a bullish note with the markets surging to new highs for the year. The move was triggered by follow-through buying tied to the momentum created by the previous week’s 5.0% plus gains.
At this time last week, we were questioning whether the rally would continue because the move was being fueled by speculation and aggressive short-covering. We didn’t think that the rally had much backing from the hedge funds because they had been liquidating positions for much of the first half of March.
We may be right on our assessment because both the WTI and Brent contracts formed weekly technical closing price reversal tops which tend to trigger the start of 2 to 3 week corrections.
Crude oil futures began the week supported by a rebound in stock markets and escalating Saudi-Iran tensions. Global stocks came off six-week lows on optimism…