Slow News Cycle Keeps Oil Prices in Check
Today’s Spotlight Market
Crude Oil futures continue to tread water due to lack of geopolitical events and more than ample supplies. While there is still plenty of tension in Syria with ISIS rebels, the potential impact on Oil supplies is negligible. This is a shift from late 2012 to early 2013 when the Iranian nuclear standoff and Libyan instability created a tangible threat to supplies. In addition to the lack of news, inventory levels remain above average. There is simply not enough demand to put a major dent in supply.
Fundamentals
US Crude Oil inventories are forecast to have swollen to 359.6 million barrels this week, which would be above the 5-year average. US Crude production is expected to have reached 8.87 million barrels a day, the highest output since 1986.? Inventory levels could swell in the near-term due to refinery outages and maintenance.? Gasoline inventories, however, may see drawdowns as a result, which may offset the potentially bearish Crude Oil inventory data.? Chinese manufacturing continues to post disappointing numbers, with the PMI coming in at 50.2. The median estimate was 50.5. It will be interesting to see the impact the recent Chinese reforms will have on the economy there. Also, it seems as though the government in China is willing to miss its 7.5% target growth rate in order to put in reforms to keep inflation in check and crack down on corruption.? In the US, the economic outlook is much more upbeat, with last Friday?s upward revision to the GDP.? The labor market continues to make positive strides, but traders may want to keep an eye on the real estate market.? It could be the weak link going forward, as a housing slowdown may lead to a loss of wealth and curb consumer spending. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the November Crude Oil market deviating from its recent sharp downtrend line.? Additionally, Nov Crude may be forming a double-bottom on the chart, which could signal a near-term price reversal.? If confirmed, the measure of the double-bottom could suggest prices might test the $100 mark on the upside.? Failure to confirm the pattern could mean prices are set to grind lower or, at best, trade sideways.? The recent bounce in prices has resulted in the RSI indicator nearing overbought territory.? The RSI indicator has been moving higher since mid-August, even though prices moved lower-to-sideways over the same period.? This may suggest that prices could see a reversal.
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