This week’s trade in the oil market may witness bottoming action take place, as the U.S. election begins to move to center stage. There may also be an exit from the markets by hedge funds that close their books on Oct 31st, but the impact they actually exert may be somewhat limited in the near-term as their long positioning has already been reduced.
Oil prices may continue their short-term correction over the next few days, with support in WTI offered between $81.00 and $85.00/bbl. We think that the rate of decline will slow in the near-term, as some of the impulsive selling and weak longs have exited the market. A focus will be on the FOMC announcement today, but little change in policy is expected after the last meeting’s implementation of QE3.
