The oil markets recorded further record highs yesterday with WTI hitting $123.93 (€157.89) and Brent up to $122.37 during the respective trading sessions.
The much-anticipated EIA data delivered a set of bearish numbers with crude stocks leaping by 5.7mio bbls. Gasoline stocks also rose with a draw in distillates. The rise in oil prices has been attributed to this draw in distillates particularly diesel and heavy fuel oil which are seen to be in short supply globally.
On the face of it overall this data should have precipitated a pullback but clearly the market is ignoring the fundamentals and powering ahead. The oft-cited inverse correlation between rising oil prices and a falling Dollar is being ignored with the greenback rising to an eight week high against the Euro with no corresponding softening in oil prices.
Clearly the current spike in oil prices has been sharp and furious and with little in the way of fresh impetus and lack of supporting fundamentals a retracement must surely be on the cards. That said, in current conditions it is difficult to call exactly when the bearish elements will prevail. More importantly, the key issue is how far that pullback will be, with oil prices below $100/bbl (€82.83) at this stage a dim and distant memory.