Commodity Update, Thursday, 10th of September, 2020
Oil prices recovered modestly overnight, but the rally seemed artificial with prices moving higher in sympathy with equities and not because of improved oil fundamentals. Brent crude rose 2.20% to $40.60 a barrel, and WTI rose 2.85% to $37.80 a barrel.
Both Brent crude's and WTI's are now critical supports that must hold on a daily closing basis. Tonight's US crude inventories data will assume much greater importance than in recent times. With oil having fallen hard and fast, a rise in stockpiles by either crude or gasoline could spark another sell-off.
If Brent crude settles for an extended time under $40.00 a barrel in the coming weeks, the ball will move into OPEC+'s court again, with pressure increasing to roll back the recent easing in production cut targets. Achieving robust compliance this time around may prove much harder than previously.
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