April 2018 turned out to be a favorable month for crude oil prices. Rising geopolitical tensions in Syria and the Middle East coupled with higher demand and lower inventories aided a 5.6% rally in the crude oil prices in the past month. Moreover, the expectations of amicable resolution on trade war between the United States and China also supported a rise in crude oil prices.
FiND, alternative data platform has captured the key news items which supported rally in crude oil. At the same time, Heckyl platform has accurately captured underlying positive news sentiment around crude oil (Image 1).
[Image 1: Crude Oil News Flow during April 2018]
Heckyl platform has shown strong demand for crude oil, which augured well for the price rally. Since Feb-17, the demand for crude oil has been outstripping the supply consistently (Image 2).
[Image 2: Crude Oil Supply-Demand Balance]
Lower inventory levels also fueled a rally in the oil prices. OECD region has been witnessing a downtrend in crude oil inventories since June last year (Image 3).
[Image 3: OECD Crude Oil Inventory]
News sentiment remains bullish for crude oil
By leveraging our news and sentiment analysis capabilities, we have constructed a strategy to capture bullish/ bearish signals for crude oil. Bullish/ bearish signals are generated based on the crossover of shorter-term (20-days) and longer-term (50-days) moving averages of news sentiment score.
Our strategy showed a shift in sentiment for crude oil from bearish to bullish on Apr. 8, 2018. Since then, sentiment for crude oil remained in bullish territory.
During this bullish phase, the crude oil price has surged 8.5%. There was a clear opportunity to go long on crude oil during the second week of Apr-18 and book handsome profit towards the month end.
[Image 4: Compare screen highlights Crude Oil Price and News Sentiment DMAs]