Demand hopes rise as delta fades. WTI up $1.80 to $70.40.
The pace of US covid hospitalizations fell yesterday for the first time in this wave. Globally, cases are also showing more signs of a slowdown.
The bad news is that flight demand and mobility are showing negative signs but that may clear up alongside delta as well.
The supply side is probably a bigger driver at the moment. Major portions of Mexican production and US gulf production remain offline. Beyond that, oil companies are showing little willingness to drill except in the best basins.
Here’s a compelling chart showing that oil US permian shale production is back to pre-covid levels with other basins in an ongoing decline (some of which I fear is terminal).
Technically, the oil chart is also interesting. It’s not perfect, but you could draw an inverted head-and-shoulders pattern on the daily chart and that would target well above $80. The break of the $69.96 high from August 12 and the $70 psychological mark today are also bullish signs.
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