It took 3 trading weeks to drop the WTI benchmark price to its low, and only 5 days to record a subsequent full retracement. Light, sweet oil prices ranged from $37.75 to $45.90, a difference of $8.15. These gains were sustained over a week of disparaging economic data from China that turned into tumbling stock prices and the disintegration of billions of dollars in equity. Comparing WTI's performance this week with its past is this diagram:
Just as discussed before, oil markets retraced almost half of the losses accumulated over 3 months in a matter of days. That's really all there is to it. Technicals are pointless to discuss in a market saturated with emotion and wide ranges of sentiment. Investors now need to decide when the extension of gains will end and prepare to trade accordingly. Charts and graphs should be eradicated of the past five days as the major declines and inclines are almost pointless in the grand scheme of things. The outlook appears to be the same for global markets, a slight bullish tilt after a correction that sold stocks to a lower price. Crude oil will probably be looking at more losses in the next couple months as the gains on emotion will be replaced by the realities of fundamentals. The same goes for XOI and XNG which both saw significant gains this week as part of the energy sector. Demand data will also be in question as Asian markets continue their spurts of volatility. Keep one eye on the Shanghai Composite before coming to conclusions on crude market data. Possibilities of supply cuts loom in the background with OPEC's member states calling for action. Even though I suggested that OPEC does not hold the power of price manipulation, they can still cause price movements by affecting trader sentiment. For now, though, crude oil's jumps will be supported by high volumetric data where the last two days of increases saw 500,000 and 635,000 buys as new long positions are created in the revived market. As the volatile week closes out, and traders begin their analysis of a refreshed market, we'll be looking ahead for further stability from a market swing that deflated prices to their realistic values. Confidence in the system has not faltered like it had in the 1930's and 2009, but there must always be global credence to the possibility of a recession which would doom us all to our globalized fate.