Crude oil unwinds much of Monday's gain
WTI crude oil rose above downtrend resistance yesterday but reeled today after Saudi Arabian and Iranian oil ministers were dismissive of the agreement to freeze production.
The break highlights the potential for a further retracement. I'm bearish on oil but it may be time to head to the sidelines. Oil has managed to hold most of its recent gains despite the hollow Saudi Arabia-Russia agreement.
Although the Feb low was slightly lower than the January low, there's the potential for a double bottom and it would be validated by a rise above $35.
Worries about the demand side have begun to fade and it's the supply side that will determine the next move.
The next number to watch is the 4:30 pm ET release of API inventory numbers. The consensus for the official report to be released Wednesday is +2281K and that's a good guide for API. Last week, there was a whipsaw after API revealed a surprise draw and then the government data showed yet another build.
We'll have the data live when it's released.
