China Beats GDP, But Oil Glut May Temper Bulls
Today’s Spotlight Market
The Crude Oil market got a boost in early trading after China reported better than expected GDP numbers. Chinese GDP grew at a 7.3% pace in the third quarter versus a consensus estimate of 7.2%.? Also, Chinese demand for Crude Oil rose by 7.1% in September, which is more than double the growth rate of August. These can be seen as positive factors for Oil in the near term given how big of a question mark Chinese growth and consumption have been to this point. Traders, however are taking the GDP data in stride. There is more relief that the figure did not disappoint rather than enthusiasm with the results.
Fundamentals
This week’s EIA inventory report could rain on Oil traders’ parade, as stocks are expected to have risen by 3 million barrels last week. To this point US demand has been lackluster at best while production continues to climb. US Crude Oil production is around 8.95 million barrels a day, which is the most the country has produced in more than 29 years.? OPEC is expected to have boosted their collective output by 1.4 % in month of September.? Cartel members have lowered their selling prices and are seen as competing for market share, rather than trimming production in hopes of boosting prices. This could exacerbate the glut in supplies and overshadow positive news from China and the US.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the December Crude Oil contract holding above the $80 level.? To this point, the contract has held up at this technical support level.? More stout support can be found around the $75 mark, should Oil fail to hold $80.? The result of recent price weakness has been oversold technical levels.? The 14-day RSI is in the mid-teens, which could be supportive of prices in the near term.? In order to gain some traction, Crude Oil prices may need to post several closes north of the $85 mark.
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