WTI Extends Rally Despite Weak US Production Data

Today the US published industrial and manufacturing production data. Both numbers were released lower than expected and added some bearish sentiment to the general stock market. Whereas WTI futures continued to extend the day’s rally, rising 1.8%.

Industrial production was released at -0.1% MoM with most forecasts at 0.3%. While manufacturing production returned -0.5% MoM with predictions at 0.0%. The data for YoY production were both bearish.

Industrial production year on year came in in at 0% against 1.2% previously. And manufacturing production printed -0.9% after a 1.3% increase in last month’s data.

However, after yesterday’s rout, with a drop of 2.8% for the day, WTI futures rallied during the European session and continued into the New York session immediately after the data.

From the day chart above we can see how WTI is still in a bullish momentum since mid-December 2023. However we may be seeing some resistance at the current level as the market attempts to break through the Ichimoku cloud.

One indicator that has already turned bullish is the SuperTrend. But we still need to see price action clear the previous high from the end of January. This would bring the market out of the cloud and suggest a new bull market is consolidating.

Contrasting Forecasts for Crude Oil

The IEA also published its monthly forecast today for 2024 crude oil demand, which it decreased from 1.24 million bpd to 1.22 million bpd. This is a stark contrast from the forecast OPEC made on Tuesday when the organization kept its previous 2024 forecast at 2.25 million bpd.

The IEA stated its main concern coming from a slowdown in the Chinese economy. Whereas OPEC’s forecast is based on a positive economic trend extending into the first half of 2024.

From the price action over the week, I would say the market has decided that perhaps OPEC’s forecast is more in line with reality. While attacks on shipping lanes could also still be of concern. But news of these events is likely only to add short-term volatility rather than determine a substantial trend.