IEA Forecast Bolsters Oil Bulls
Today’s Spotlight Market? -? Crude Oil futures have been bolstered by an improved demand outlook from the International Energy Administration (IEA).? The report from the IEA showed 2013 demand for Crude Oil in developed nations rose for the first time since 2010.? This can be construed as being positive for the Oil market, as the economic outlook for the US and other western nations has improved.? The positive demand news may partially offset the potentially larger supply of Oil from Libya and Iran.? Crude Oil futures also start this shortened holiday week with a bit of positive news from China.? The People?s Bank of China (PBoC) added funds and expanded accessibility to a lending facility in an effort to bolster economic activity.
Fundamentals? -? In its Oil Market Report, the IEA expects world Crude Oil demand to expand by 1.3 million barrels a day, which is a 1.4% jump to 92.5 million barrels a day.? The IEA also suggested that the export restrictions on Oil may give producers a disincentive to expand production, resulting in the US hitting a ?crude wall.?? The IEA is forecasting that US production will increase from 7.5 million barrels a day in 2013 to 8.5 million barrels a day in 2014, and to 9.3 million barrels a day in 2015.? The 2015 forecast, if it comes to fruition, would be the largest output by the US since 1970, when the country produced 9.6 million barrels a day.? However, it remains to be seen if producers are willing to increase capacity at this pace when domestic supplies are so high and outside markets are not accessible. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the March Crude Oil contract holding above minor support near 91.50 before rebounding in recent sessions.? More importantly, the market has held above the 90 mark.? Failure to hold this level could result in heavy selling pressure.? On the upside, the level that traders may wish to keep an eye on would be the 100 mark.? Not only is this a huge psychological resistance level, but a move above 100 would confirm a double-bottom pattern on the daily chart.? The RSI indicator remains near oversold levels, which could be seen as supportive for prices.
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