As we ease on into the weekend of frozen custard and theme parks, we have to white-knuckle it on the “intraday rollercoaster ride” that is Light Sweet Crude. This morning’s price action in WTI has seen a rally up to $46.72 at 8am, a break down to $45.88 at 8:30am, and then a rally back up to $46.69 by 9am. As of 10:11 am EST, WTI for August delivery is trading up 1.11% at $46.59.
With headlines in the energy markets relatively unchanged from day to day (i.e. “over supply”, “increased demand”), we can try and hang our hats on data in regard to the overall economic pulse here and abroad. The Bureau of Labor Statistics showed U.S. consumer prices were unchanged in June and retail sales fell for a second consecutive month, indicating tame inflation that could tilt the Federal Reserve’s hand in regard to not raising interest rates for a third time this year. CPI (consumer price index) increased 1.6% in June, the smallest gain since October. Last month, gasoline prices fell 2.8% after tumbling 6.4% in May. The Fed’s 2% inflation target seems out of reach for now. Overseas, China’s crude oil imports in the 1st half of this year were up 13.8% vs the same period last year. India’s June oil imports were up 12.04% year over year. With the Saudis trying to support oil prices by reducing crude shipments to the U.S., crude oil import growth from China and India, reports of accelerating demand growth from the International Energy Agency, and falling crude stocks in the U.S., we should certainly be able to hold a weekly support level of $45.09 for the time being. If not, hold on tight, because the light volume, limited headline summer trading rollercoaster has just lowered its safety bar. Hang on.