Oil Markets: Crude Technicals And Continued Jet Strength

SFOT did some work and found that a lot of the strength in the front end of the Jet fuel curve has been due to physical traders buying Jet fuel for storage. The recent gasoline strength has cleared a lot of stocks in gasoline, particularly in ARA region. With spare storage space and an ever widening contango in middle distillates, particularly in Jet Fuel until recently, little wonder there is so much buying n the front end of Jet.

As pointed out yesterday, real demand is not evident, and SFOT will now look at this opportunity to enter a short position, either on diffs or a time spread on the diff. He understands though this can be a brutal market at times as the number of participants are limited.

API numbers released yesterday shows another crude stock draw, and another improved demand/supply situation in gasoline, while distillates continues to build into another high in forward days cover. The crude draw perhaps is playing in participants mind, as WTI seems extremely well supported when EUR/USD was under pressure this am.

Is it a sign we might have little downside now? or will profit taking come in during the afternoon post DOE? Or perhaps a cross of the 200-day moving average is now playing on everyone’s mind and encouraging inflows into WTI financials?

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