Oil: Momentum algorithms are in buy mode – Rabobank

Analyst at Rabobank, point out oil markets made new highs on the week despite sharp sell-offs on Monday and Tuesday. They see there has been a palpable change to oil price dynamics now that momentum algorithms are in “buy” mode.  

Key Quotes:  

“The oil market is acting better now and in the face of not so stellar data than it was in the days after the Saudi oil-attack which was one of the single biggest oil supply shocks in history.”

“The Canadian rail strike is impacting crude shipments out of Western Canada as is the Keystone pipeline pressure reduction.”

“Looking forward we remain confident that the fundamental oil data will improve in the weeks ahead and crude stocks in the US will decline to multi-year lows before year-end. In fact, it is worth noting that crude stocks on the US Gulf Coast slipped into a small year-on-year deficit in this week’s US Department of Energy inventory report despite registering a small build.”

“We continue to put more weight on the recent quantitative developments for oil markets and the noticeable change in behavior and price dynamics as a result of momentum indicators turning “bullish” and the “Managed Money” crowd turning net buyers. We continue to see scope for a strong rally in oil prices as we head into 2020.”