Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

Trading position (short-term, our opinion): currently no position is justified from a risk-to-reward point of view.

Oil prices rose to their highest level in a month as US production in the Gulf of Mexico is still limited by damage from Hurricane Ida.

Market Analysis

On Monday, crude pierced through its monthly high ($70.61) by trading up to $70.78 so far, while we learnt from the Bureau of Safety and Environmental Enforcement (BSEE) that the recovery of the US production in the Gulf of Mexico has only reached half of its capacity. According to the BSEE, several offshore oil rigs were forced to be evacuated because of Ida.

Regarding oil demand, the market sentiment seems to appear a little more optimistic about its gradual recovery and with cooler temperatures as we approach the fall season.

The crude oil prices could now develop towards our previously defined medium-term resistance, located at $72.30, on the October contract.

Figure 1 – WTI Crude Oil (CLV21) Futures (October contract, daily)

In summary, we can see some enthusiasm rising on crude, accompanied by a slow recovery of US production in the Gulf of Mexico. In addition to its gradual adjustment by OPEC and its allies, we should see the supply getting retightened with the global oil demand by the end of the year.

As always, we’ll keep you, our subscribers well informed.

Please note that due to market volatility, some of the key levels may have already been reached and scenarios played out.

Trading position (short-term, our opinion): currently no position is justified from a risk-to-reward point of view.

Thank you.

Sebastien Bischeri
Oil & Gas Trading Strategist