The market was showing fresh strength this morning and prices remained within striking distance of the highs. While the market should have fully embraced news of a 2.3% decline in Chinese domestic crude oil production last month and evidence that Chinese refinery activity was running very strong and close to the record all-time volume, the market should garner an additional lift today from news of a significant leap in Chinese home prices. Furthermore, current Chinese throughput by refineries during the month of June was pegged at 11.1 million barrels per day, compared to the record throughout level of 11.26 million barrels per day and that is bullish. Another fresh bullish fundamental was seen overnight in the wake of comments from the Kuwaiti oil minister who suggested that the oil cuts were working, but that news was tampered by comments that it was too early to consider deeper production cuts.
Today’s Market Ideas: While technical and fundamental bias look to remain up in crude oil, the threat of a supply-side driven reversal still hangs in the air. Prices should be supported by the favorable Chinese economic news again overnight, but it could take sustained gains, new highs in US equities, and ongoing weakness in the dollar to project the September crude oil contract back up to near term resistance of $47.50.
Sep ’17 Crude Light Daily Chart