WTI June July Spread

The WTI front month spread June / July has fallen back today to near 60 cents, leaving a clear area of resistance above at 82-84 cents.

That resistance consists of 5 of the prior 6 sessions' highs.

Reasons for the pullback seem to be a belief of possible easing of Mideast tensions as the parties involved are being coaxed to seek a solution. As well, in our estimation, the demand for crude has leveled off for now. This seems suggested by the economic data from the U.S. and China seen of late. In the U.S., the 1rst quarter GDP data was weaker than expected. In China, over the weekend, data came out that showed China's industrial profits fell in March, stirring doubts about economic recovery. (Reuters)

Also working against crude oil to some degree is the weak tone globally for the distillate cracks, which might cause refiners to reconsider ramping up runs greatly as they consider coming out of spring season maintenance. "Diesel cracks linger at lowest since June", reads the Quantum Commodities headline from Friday.

Crude will be supported though by the tightness in the medium grade supply from the UAE and Mexico most notably. The UAE is keeping more medium grade crude to run in its own refinery. Mexico's crude exports have hit a near 20 year low as per news seen over the weekend. (Quantum Commodities)

Technically the momentum for the June July spread is poised to turn negative. Support is likely near the recent low at 42 cents. If broken, next support lies at the 28 cent area.

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