Can Oil Stop Its Slide?

Today’s Spotlight Market
Crude Oil futures have fallen to 3 month lows, as tensions in Iraq and Libya have eased a bit. In Iraq, rebels have control of significant portions of the northwestern part of the country, but the Iraqi army has stemmed the tide and prevented ISIS rebels from expanding their control. This has sucked much of the Iraq premium out of Oil prices. Libyan rebels are returning two key terminals to government control. Libya has 7.5 million barrels ready to export from its Es Sider and Ras Lanuf terminals. Crude Oil has also felt some pressure from outside markets. Precious metals have stolen some of the Oil market’s thunder. Also, weakness in grain prices has had a negative impact on commodity prices as a whole.

 

Fundamentals
On the supply side, the consensus estimate is that US Crude Oil inventories fell by 2.5 million barrels the past week. If this is in line with actual results, US supplies would stand at about 380.1 million in the week ended July 11. The market remains extremely well supplied in North America, but inventory levels have been steadily declining since reaching a record 399. 4 million barrels back in April. The API will report its data later this afternoon, while the EIA government report will be released tomorrow morning. Traders may want to keep an eye on Cushing, OK inventory levels, which may actually climb this week. A rise in inventory levels at the NYMEX delivery point could be a sign that demand at refineries along the Gulf Coast could be softening. If refinery demand is indeed softening, the backwardation in Oil prices could flatten out a bit. The Brent Crude contact already finds itself in a steepening contango, a sign that the market is oversupplied. ?

 

Technical Notes? -? View Today’s Chart
Turning to the chart, we see the August Crude Oil contract trading near the 100 level, threatening to take out this psychological support. Prices have already broken support near 102.15. Oil prices now find themselves below the 100 day moving average, which can be seen as bearish. The recent sell-off has resulted in technically oversold conditions.

Tuesdayjul15

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