Breaking News
Investing Pro 0
Free Webinar - Crude Oil Trading 2023 | Thursday, February 9, 2023 | 01:00PM PST Enroll Now

Oil Prices Jump 6% as Volatility Debuts in Oversold Market

Commodities Mar 24, 2021 05:14PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
LCO
-0.01%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-0.01%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
NYF
+0.25%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Barani Krishnan and Liz Moyer

Investing.com -- The much-anticipated volatility in oil is finally here. 

Crude prices settled up 6% on Wednesday, recouping virtually all of what they lost in the previous session. The rebound was largely technical, though it was also helped by a benign weekly dataset on U.S. oil supply-demand and reports of a vessel blockage in the Suez Canal waterway, where at least 10% of the world’s oil passes through.

“The Suez Canal story provided the fundamental base for what was essentially a technical rebound from oversold conditions we reached in over a four-session window that wiped out a net 11%,” said John Kilduff, founding partner at New York energy hedge fund Again Capital.

“But the path of least resistance still seems lower as too much optimism had been priced in on economic reopenings and we’ll just have to see how that washes with the new Covid wave in Europe and mitigation efforts on the bloc.”

New York-traded West Texas Intermediate, the benchmark for U.S. crude, settled at $61.18 per barrel, up $3.42, or 6%, recouping most  of Tuesday's losses. WTI hit a six-week low of $57.34 in the previous session.

London-traded Brent, the global benchmark for crude, settled at $64.41, up $3.62, or 6%, also recovering most of the previous session's declines. Brent struck a six-week low of $60.51 on Tuesday.

The plunge in oil in recent days came after a near-interrupted four-month long rally driven by OPEC+ production cuts, the promise of economic reopenings from Covid-19 closures and a blockbuster U.S. pandemic relief that was underway. During that run-up, WTI had risen from a little under $36 per barrel on Oct. 30 to reach just under $68 by March 8. Brent went from under $38 to just above $71 in that same stretch.

The rally hit a bump after both crude benchmarks fell 7% on Thursday and another 6% on Tuesday on worries about Europe’s growing pandemic curbs and excruciatingly slow rollout of Covid-19 vaccines. 

Wednesday’s rebound came after the daily and hourly RSI, or Relative Strength Index, reached oversold areas when Brent hit $60.50. 

In the Suez Canal, powerful winds forced a ship aground on one of its banks, blocking nearly the entire width of the waterway and producing a large traffic jam in one of the world’s most important maritime arteries. As of Wednesday morning, more than 100 ships were stuck at each end of the 120-mile canal, which connects the Red Sea to the Mediterranean and carries roughly 10 percent of worldwide shipping traffic.

Meanwhile supply-demand data for the week ended March 19, released by the Energy Information Administration on Wednesday, was received positively by the market.

Crude oil inventories jumped 1.912 million barrels last week, compared with analysts' expectations for a draw of 272,000 barrels.

Distillate stockpiles, which include diesel and heating oil, jumped 3.806 million barrels in the week against expectations for a draw of 122,000 barrels, the EIA data showed.

Refinery crude runs were 956,000 barrels. The weekly refinery utilization rate was 5.5%, according to the EIA report.

Gasoline inventories rose 203,000  barrels last week the EIA said, compared with expectations for a 1.186 million-barrel build.

Oil Prices Jump 6% as Volatility Debuts in Oversold Market
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your investing.com profile, will be public on investing.com and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (15)
Fabrice Lange
Fabrice Lange Mar 25, 2021 3:15AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
oil is not the future. last months of profit. Hydrogen is the future after electricity.
Pablo Blanc
Pablo Blanc Mar 24, 2021 10:10PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
What a time to be bullish, buying dips for the last 7 weeks
Gershom Zvi
Gershom Zvi Mar 24, 2021 8:56PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why is red now ?
Boyoung Schang
Boyoung Schang Mar 24, 2021 6:13PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Every time I buy something, It goes down. News says "The markets rotate, buy energy and oil" then it went down five days in a row! " Buy traveling stocks and gambling stocks"  Silly me! I bought them, next day they all went down! "It's time to buy tech stocks, they beat up too much" Silly silly me!!!I bought them again, Next day, it went down! I don't trust the markets anymore!!! too unpredictable and too much fear in the markets!
Boner Uncle
Boner Uncle Mar 24, 2021 6:07PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
forget oil explorers...buy refiners like PBF and natural gas players.
Ernest Wong CA
Ernest Wong CA Mar 24, 2021 4:00PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Are Goldman Sachs & its partners in crime buying up? LMAO
Barani Krishnan
Barani Krishnan Mar 24, 2021 4:00PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ernest, congrats ... you were on the money! :)
Ernest Wong CA
Ernest Wong CA Mar 24, 2021 4:00PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Barani Krishnan  yes I'm still in the money since Brent $61. TP some at 64.54 this morning and let the rest Longs run. Be very cautious at the OPEC+ meeting next week though! The Saudis may play surprises again buy extending voluntary cuts or further cuts. However the opposite may happen too. so risk management is very important. Good luck to you man, if you are trading :)
Barani Krishnan
Barani Krishnan Mar 24, 2021 4:00PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Ernest Wong CA  Ha ha ... Great stuff! I don't trade man. Two reasons: 1. Frees my writing from any positioning bias 2. Helps me sleep at night :)
Fabrice Lange
Fabrice Lange Mar 24, 2021 2:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Artificial price. There no more demand !!! Swan song for me....
Barani Krishnan
Barani Krishnan Mar 24, 2021 2:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Fabrice, I concur. This is just loading to dump again.
Barani Krishnan
Barani Krishnan Mar 24, 2021 2:48PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
From John Kilduff: “But the path of least resistance still seems lower as too much optimism had been priced in on economic reopenings and we’ll just have to see how that washes with the new Covid wave in Europe and mitigation efforts on the bloc.”
Jacob Steinschlag
Jacob Steinschlag Mar 24, 2021 2:40PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
OVERSOLD?! You mean overbought lol. These prices never justified the demand, crude had been piling up for weeks and still price had been pushed higher while many countries are still under lockdown lol
Barani Krishnan
Barani Krishnan Mar 24, 2021 2:40PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Jacob, I know where you're coming from and wholeheartedly agree that the 90% ramp up between end-Oct and mid-March was pure, unadulterated B.S. The 11% net crunch over the last four sessions was, of course, nothing to compare. But it did send a reverse signal on the RSI. Going forth, I suspect there'll be as much loading and dumping.
Barani Krishnan
Barani Krishnan Mar 24, 2021 2:40PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
From John Kilduff: “But the path of least resistance still seems lower as too much optimism had been priced in on economic reopenings and we’ll just have to see how that washes with the new Covid wave in Europe and mitigation efforts on the bloc.”
Alan Rice
Alan Rice Mar 24, 2021 1:38PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Get your free oil (everywhere) !!
Barani Krishnan
Barani Krishnan Mar 24, 2021 1:38PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Save the "free" for under $50, Alan.
Zubair qureshi
Zubair qureshi Mar 24, 2021 12:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
hello
Alan Rice
Alan Rice Mar 24, 2021 12:02PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email