WTI crude oil is $1.40 away from finishing the week higher

Oil has been a crazy trade this week with the commodity getting pounded — seemingly without an oil-specific catalyst — only to start a bounce on Wednesday.

Crude ended last week at $109.56 and sank as low as $101.53 on Wednesday. Now it’s trading up $4 today to $108.19. If it can gain another $1.40, it could finish the week in positive territory.

Even now, there’s an incredible disconnect in the market. Energy company stocks have been brutalized this week, with some falling 20% and yet the commodity is scarely negative. Some of that speaks to the drop in natural gas prices but it’s largely about recession worries.

In terms of price action, the slow climb followed by a sharp correction is a classic bull-market signal. It’s the old ‘up the elevator, down the escalator’ move.

I thought this note from RBC on Wednesday was particularly prescient.