Oil prices fall back

Oil markets retreated to the $76.80 level as the threat of Hurricane Humberto dissolved and profit-taking activity muted upward momentum.

The profit-taking element of the price adjustment is set to continue today,Friday but bullish factors remain very much intact. The shocking EIA date revealing sharp falls in US crude stocks published on Wednesday coupled with the OPEC post-dated boost to production (which has been widely regarded as insufficient) means that the Q4 squeeze in oil predicted by the IEA earlier in the year is the key driver to markets at present.

These fundamentals are set to continue to attract speculative funds which will add impetus to the upside and continue to fuel the journey to fresh highs over the coming weeks. Hurricane activity and potential instability in the Middle East will only serve to deliver the market into uncharted territory sooner.

Expect a sideways trading range today - $76.50 - 77.60 looks to encapsulate likely price activity.