Two down days in a row–a big trend given the volatility in oil price trends recently. As of the close on Tuesday, August 30, October futures for West Texas Intermediate, the U.S. benchmark, were down 0.28% to $46.22 a barrel. The selling comes as a Bloomberg survey showed that traders expect a climb in crude inventories of 1.5 million barrels in the U.S. Energy Information Administration report due for release tomorrow.
The decline is, in my opinion, reflection of exactly how uncertain oil markets are about the pace of any rebalancing of supply and demand. The market moves up on hopes that OPEC, or somebody, will reduce production, and then falls when those hopes turn out to be unfounded.
Crude peaked at $51.23 a barrel on June 8 and then entered a bear market as the price fell to $40.06 on August 1. That was followed by a bull market as oil climbed to $48.52 a barrel on August 19. The recent two-day decline put a stop to that bull. Is another bear to follow? That trend would take oil back to the $40 level that has marked recent lows.
Trading volume in the October futures today is running about 10% below the 100-day moving average.
In other words, it’s August and light volumes make big swings more likely.