Will Tighter Supply Concerns Send Oil Higher In April?

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This week, the oil market saw a rebound after a period of soft trading, driven by global tensions.

Brent prices surged to $86/bbl following a terrorist attack in Russia, while ongoing drone strikes on Russian refineries by Ukraine kept the oil market's risk premium elevated. In the US, the number of oil rigs decreased slightly, reaching 509 for the week ended March 22, 2024.

The total rig count, combining oil and gas, stood at 624, down from 629 the previous week.

Speculators showed increased confidence in the market, with net long positions rising for both NYMEX WTI and ICE Brent futures contracts. NYMEX WTI saw a 50,072 lot increase, reaching 219,965 lots, while ICE Brent net longs rose by 54,830 lots to 288,988 lots, the highest level since March 2023.

Overall, the oil market's upward momentum persists, supported by geopolitical tensions and investor optimism, particularly regarding supply constraints and demand outlook. There is also a noteworthy period of seasonal strength for WTI crude oil between March 31st and April 18.

The average return has been 1.58% and over the last 254 years, the pattern has a 60% winning trade percentage. There have also been three periods of double-digit returns in 2001, 2008, and 2015. So, with oil sitting above major support at $80, can we see a bounce from that level in line with the seasonal pattern for gains? The major trade risk here is that previous seasonal trends do not necessarily repeat themselves again each year.

Video Length: 00:02:17


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Disclaimer: Past results and past seasonal patterns are no indication of future performance, in particular, future market trends. seasonax GmbH neither recommends nor approves of any particular ...

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