Oil is also turning around. Brent is in its fifth trading session showing a downtrend with a sequence of increasingly lower lows and highs. Yesterday morning, we saw bulls’ efforts to break the trend run into furious selling as the price lost 5% or almost $6 in less than five hours.
We had already seen in early March that oil was looking too expensive for buyers in the market and economy, causing a demand shock and triggering a correction. Fresh data from the IEA highlights that global inventory rose in April for the first time in almost two years. However, OPEC+ is increasingly falling short of quotas, and US production has stagnated near 11.9m BPD for the last ten weeks.
Our estimate is that we will see the end of a multi-month rally in oil strengthen if Brent consolidates below $114.
