Subtitles section Play video Print subtitles Hello and welcome back to the Note. Slower day on markets today, the S&P here in the U.S. finished, down for the day, and we had a negative reaction to earnings from Google and Microsoft after the bell, so there's every risk that that'll continue to into the morning. One thing that is very intriguing, however, was that oil continued its advance, and that's really very surprising if you remember the headlines from the weekend. Now if we take a look at this first chart, this shows you what has happened since trading opened in Asia on Sunday night. And you can see that there was an immediate reaction to what appeared to be very bad news, if you wanted oil to go up, that's the OPEC countries had failed to agree on a production freeze that should've, you would have thought, pushed the oil price down, instead, as you can see, there has been a well sustained rally upwards in the oil price. Now if we look at this in a longer term perspective, you can see, yes, we're still a long way down from where we were about two years ago, but the oil price is now actually back up to roughly where it was early last year, and after testing that 200-day moving average, that big measure of the long term trend, it does appear to have confirmed itself above that long term trend. This bounce that we have seen in the last few weeks adds up from a trough to a peak, to almost 70% gain in oil, quite remarkable. Now, what is even more remarkable, is that this has been achieved despite the news we had from Doha last weekend. And if we now take a look at U.S. Crude Total Inventories, admittedly this number has a lag, but the inventory continues to rise very sharply indeed, in fact its one of the highest numbers on record, you would think that would be bad for the oil price. However, the inventory is at least not rising as fast as it can do at this time of year. And if we now take a look at production numbers for the U.S., you can see that they have begun to decline. Again, this number is produced with a lag, many people are able to assess rig counts and so on to take a guess as to where production is moving, and so there is a strong belief in the market that fundamentals are moving in favor of the oil price, that this will... that we are going to see production steadily decline from here and inventories come down from here. If we do, then the sentiment, which has plainly changed, will be confirmed. Obviously things will get a little uglier in the oil market if the fundamentals don't confirm this very striking change in sentiment.