Oil to struggle
Oil prices have had a great run over the last few weeks. However, with the Fed holding back from Yield Curve Control and the risks of COVID-19 second waves occurring the case for global demand rising seems unlikely. Here are some further reasons for oil to face pressure to the downside from Bloomberg:
Reasons for oil to struggle
- Fuel stockpiles in Singapore last week topped 56 million barrels which was the highest level in four years. This raises questions about the effectiveness of OPEC+ extended cuts
- Sinopec, China's top exporting oil company, has slashed exports for June by 50% from May's level. This signals that most economies are unable to copy China's economic recovery after re-opening.
- China's net exports of refined oils chalked up its firs deficit since 2015 which suggests oil's recovery will be a bumpy road at least. See chart below

Furthermore Goldman Sachs have warned about an unsustainable rally across commodities. The total picture is likely to keep oil prices capped for the future. Here are the key technical areas for sellers:
Expect sellers, if the situation remains the same for oil, from the 200EMA.

Another place where we can expect seller is on a re-test of the 4hr trendline below which broke out yesterday with investors selling on stop.
