Oil Acts Exhausted on the Downside, as the Market Starts to Embrace the Potential for Output Cuts

In the aftermath of this morning's EIA data, which showed a larger than expected build in Oil and Gasoline, prices shrugged off the negativity-- largely because last evening's API-data, oversupply shocker primed the pump, so to speak.

After the EIA release, Oil climbed from $30.80 to $31.75 prior to receding to the $31.25 area as we speak.

After two data releases indicating a still huge and growing excess supply problem, it is a bit remarkable that Oil remains north of $30.00, but also suggestive of downside exhaustion in a grossly oversold market in need of more recovery rally.

That said, Oil must hurdle and sustain above $32.20/40 to get some upside traction towards $34.00 - $35.00.