WTI crude oil settled on Friday up by 50 cents to $77.87. It's a better end to a disappointing week for the oil bulls.
It started with strong China retail sales data, included a US inventory drawdown and finished with an impressive US PMI from S&P Global but crude couldn't get any traction. Technical selling hit when it fell below $79.00 and into the post-OPEC cut 'gap', triggering a fall to as low as $76.21 yesterday.
The rule of thumb is that when a market falls into the 'gap', it closes it so oil bulls will be reluctant until $75.67 is touched.
But how bullish can the bulls be? Last week, oil looked like it was breaking to the upside as it rose above the highs of the year. Instead, it stalled and reversed. That shows ongoing skepticism about the global economy and that it's going to take real evidence of strength, especially in China to sustain a durable bid. Many think that's coming in H2 so you wonder if that's a crowded trade but, even if it is, supply falling short of demand won't be solved by anything less than higher prices.
