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.”