Correction or fresh turn lower
On Tuesday, WTI crude hit $41.90, the highest level since early December. After a 4% decline yesterday, it's fallen another $1.13, or 2.87%, to $38.64 today. Most of the decline has come in the past hour.
Technically, oil stalled near the 61.8% retracement of the Oct-Feb decline and its retracing the 50% level, which also coincides with the early January high.
So long as those levels hold, I don't think the bears are back in control.
One thing gives me pause: the turn in oil is that it came on fundamentals. It began late on Tuesday with a huge build in API oil inventories. That was confirmed by yesterday's nearly 10 million barrel build in official government data.
It was the combination of oversupply in oil and fears about weak demand that sent crude to $26 earlier this year. The demand fears have faded but oversupply is a growing problem. It's what started the decline in oil and until there is balance in the market, it will continue to add pressure.
In trading, it's all about timing. My inclination is to wait until after the April 17 oil production freeze meeting. Once that's out of the way the bears won't have a catalyst to worry about.
