Risk On For Oil

Today’s Spotlight Market
Crude Oil futures continue to trade above the $100 mark after supportive statements from the Federal Reserve and a continued heightened state of alert in the Ukraine region.? In her first speech in front of Wall Street since becoming the Fed Chairwoman, Janet Yellen emphasized her backing of a recovery. This follows the extremely dovish FOMC minutes, where the Fed essentially backtracked on their initial interest rate outlook/timetable, suggesting rates could stay low for as long as they need to in order to facilitate a recovery.?

The heightened state of alert in Ukraine is an ongoing concern for energy traders.? Russia had already threatened Europe by stating that supplies of Natural Gas could be cut off if Ukraine does not pay its bill.? There are similar concerns with regard to petroleum, which has both consumers and traders on edge.? The humiliation of Ukrainian forces by pro-Russian protesters, who managed to seize tanks and flew Russian flags from the armor, will do little to help the situation.

 

Fundamentals
In addition to the supportive statements with regard to Fed stimulus, Fed Chairwoman Yellen also reiterated sentiment that the slowdown in economic metrics over the past several months could be attributed to the extremely cold weather. She had also emphasized that inflation remains tame, which would allow the Federal Reserve to continue with its expansionary policies.?

This also set a positive economic tone for the WTI Crude Oil contract.? The EIA reported that Crude Oil supplies increased by more than 10 million barrels this past week, which is the largest weekly increased in almost 13 years.? Despite the huge jump in inventories, the destocking of Cushing continues. The NYMEX delivery point has shed another 800,000 barrels this week.? The EIA reports were even more dramatic than the API, which reported a 7.6 million barrel build and a drawdown of 600,000 barrels from Cushing.

Overall, the reports could be seen as supportive for Oil prices, as the huge build could be attributed to the backlog of shipments due to the temporary closure of the Houston Ship Channel in late March.

 

Technical Notes? -? View Today’s Chart
Turning to the chart, we see the June Crude Oil contract trading near resistance at the 104.25 mark.? Failure to take out this level, as well as relative highs at 104.92 can be seen as somewhat negative in the near-term.? The market needs to take these levels out to maintain upward momentum.? The RSI is still showing near overbought levels, which may drag on prices going into a long weekend.

ThursdayAPR17

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