Energy Futures Update

Yesterdays weekly inventory data did failed to impress the Crude bulls, sending markets lower.

This supports our view that WTI should move lower in the short term. However, macro data is indicating that this will be short lived, and that we could be setting up for a longer term rally.
There is a some tightening in the markets according to longer term inventory data.

Yesterday, we indicated that the IEA has increased both its demand and growth forecasts for China, while non OPEC nations are still indicating a restrictive supply situation.

The demand in China rose at a faster pace than previously expected at 9.3% last year, according to sources at the Chinese Ministry of Commerce. Non OECD oil demand as a whole remains very robust, in stark contrast to the signs of growing weakness in non OPEC supply growth.

Long term to long, short term to short. The technicals paint a bearish picture, maybe even setting up for a sell off towards the 54.60 by the end of the week, as we, once again, point out that the lower highs in WTI indicate slowing momentum in the market.

The trading tactics today will be to trade from the short side, selling into rallies for a further extension of the downside.