Stocks were not the only beneficiary of today’s revised 2Q-2015 GDP report which indicated that the US economy grew at 3.7% rate. WTI Crude Oil prices responded positively to the news as well. This has led some commodity energy analysts to rethink their assessment for future oil prices. Other bullish developments to consider are:
- Yesterday’s -5.5mm surprise drawdown in crude oil inventories as reported by the EIA.
- Schlumberger’s announced acquisition of Cameron Int’l a possible sign that a bottom in energy prices could be near.
- Signs that China’s stock market rout may be coming to an end as economic conditions stabilize from government stimulus measures.
Below is a daily chart of WTI Crude’s September-2015 contract. Technical analysis of it reveals a key reversal pattern occurring after the bottom occurred at $37.75. There is still some resistance to overcome at the $43.50 level. If we clear this level, there is potential to see a move to the upper $40’s or even a $50 handle on prices.
However, I forewarn that bullish retracements within a bear market are not unusual. The fundamental factors of oversupply are still pushing prices downward and this fact will not change instantaneously, but over time.