If it can’t bounce, it can’t bounce
Another day, another failed bounce in oil prices. In Asia, crude tried to rally on news of the death of the Saudi king but it gave it all back and traded to a weekly low at $45.35.
WTI crude one month chart
Since Jan 7, save for a brief foray higher and lower, oil has been in a $45-$50 range. Alone, that doesn’t say much but that the best crude could do after a swan dive is flat trading for two weeks speaks volumes. Not even a dead cat bounce to $55 despite a few headlines that could have sparked a squeeze.
Now, it looks like crude is breaking below support at $46 and may test the January low of $44. An event to watch at 1 pm ET (1800 GMT) is the release of weekly rig count data from Baker Hughes. It will probably show more drillers shutting down but with yesterday’s 10 million barrel build in US crude supplies the market still remains far out of balance.
I don’t think $44 is the bottom. It’s probably in the $30s but for all the spills in oil prices, the market hasn’t spilled blood yet. The bottom will come when oil companies are curled up in the fetal position on the ground whimpering.
