Oil's two arguments

Oil futures are undergoing a capitulation point where arguments for the bull side and the bear side are starting to go head to head. Prices have remained firm since the start of the year rising 35% however since April 23rd we have seen a pullback down to the 200 DMA which is acting as critical support. Any selloff below this level could trigger a larger washout down to the 100 DMA at $57.59 while a move back above $63.33 would reignite the next round of buying.

Here are the arguments for both sides

Bullish factors

Irans output is set to decline

Instability in Venezuela

Chinese oil imports are at record highs

Strategic petroleum reserve is in a drawdown

Net imports to the U.S. are rising

Instability in Libya

Bearish factors

OPEC has spare capacity

U.S. production has pushed to record highs

EIA inventories are back above the 5-year average

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Phillip Streible

pstreible@rjofutures.com