May is usually the strongest month for crude oil, but it certainly didn't start out that way.
WTI fell another 57 cents today bringing the weekly low to $5.50 on five straight days of selling. The weekly chart is set to record the lowest close since the week ending March 8, while the daily chart charts a head and shoulders top.
West Texas Intermediate crude daily
The measured target for this move is $74.
Some geopolitical risks stem from oil with reports that a Gaza ceasefire is possible this weekend. There is also a report about a security deal between the US and Saudi Arabia. You have to wonder if part of this deal will include bringing back some of the barrels before the US election.
Talk has begun to circulate around OPEC+'s June 1 decision to extend quotas beyond the end of June. There is a consensus not to change, as early leaks show, but it is still very early and difficult for OPEC to predict. The chance of more barrels will result in some squaring off positions among the longs, which have become a little crowded on the way up.
Finally, the economic growth signals are mixed. Today's non-farm payrolls data and weak ISM services show that the US may be slowing down but at the same time there are increasing signs that the Chinese economy is rebounding.