There’s really no bullish case that we can make for oil at this time. We are already into the summer driving season and supplies continue to increase. Last night, the API reported crude oil supplies rose by 4.9 million barrels. The market was expecting a decrease of 481,000 barrels. All eyes are now focused on the 10:30 am DOE report.
With crude oil back under $52, we believe there’s no reason for the shorts to cover. Market sentiments are overly weak and bearish and we don’t believe $50 will hold. A break of $50 and we will be targeting $42. The overall bearishness in the oil patch is why we are not recommending owning any oil or gas stocks at the moment.
For the bulls, the only hope is the June 25th OPEC meeting followed by the group meeting with Russia. If a major supply cut is reached, we will look to re-evaluate our bearish stance.
As always, trade with caution and always use protective stops.
Good luck to all!
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