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How to make sense out of a confusing rally for oil futures

The rally has bears tearing their hair out.

The oil market is definitely causing some traders to scratch their heads: big oil producers failed to reach a deal to freeze crude production and Kuwait saw the end to a short oil-workers strike, but futures are still up more than 5% this week.

“The ability of oil prices to shrug off negative news lately should not be ignored,” said Fawad Razaqzada, technical analyst at Forex.com and City Index. “This behavior of price action actually shows that the underlying bullish trend is strong for oil.”

On Wednesday, May West Texas Intermediate crude CLK6, +4.04% climbed $1.55, or 3.8%, to settle at $42.63 a barrel on its expiration day on the New York Mercantile Exchange. The contract rose 5.6% this week, while June WTI crude CLM6, +0.23% added $1.71, or 4%, to end at $44.18.

The gains came despite Kuwait putting an end to a strike by oil workers that cut output by about 60% for three days and data on Wednesday that revealed a weekly increase in U.S. crude stockpiles.

Kuwaiti oil production is poised to rebound back toward 3 million barrels a day, said Tyler Richey, co-editor of The 7:00’s Report. That news is key because the strike that began on Sunday was a big reason why oil didn’t see a much sharper decline Monday, the day after producers meeting in Doha, Qatar, failed to agree to put a cap on production, he said.

Obama visits Saudi Arabia for talks with Gulf leaders

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President Obama arrived in the Saudi capital on Wednesday, where his visit is expected to focus on further cooperation and military backing in the...


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