Bear Trend in Crude Stalling?
Today’s Spotlight Market
Crude Oil Bulls received some positive news last week after the Energy Information Administration reported that U.S. Crude Oil inventories fell by over 4.2 million barrels the past week, which was a surprise to traders who were looking for a 500,000 barrel build. Higher refining rates as well as a sharp decline in U.S. Oil imports accounted for the surprising decline in inventories.
Fundamentals
The recent bear market run for Crude Oil prices appears to have taken a bit of a breather as the market has moved into a price consolidation phase after the lead month November futures briefly fell below support at $90 per barrel. Global oil supply and demand picture continues to favor the bear camp with European Oil demand weakened by slowing economic growth and refinery maintenance and reports that the leading OPEC Oil exporter, Saudi Arabia, will be keeping Oil output steady despite lackluster global demand.
However, one has to wonder how long traders will ignore escalating geopolitical concerns in both the Middle East, West Africa and Russia, and not place a ?risk premium? in prices should oil production be curtailed should tensions increase. In addition, OPEC member Iran is now calling for cartel member nations to begin to take action to prevent Oil prices from falling further. Whether this call to action will influence other member nations to begin to curb Oil production remains to be seen. Traders may not wish to become overly bearish on Oil prices with potential upside price ?shocks? no out of the question. ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for November Crude Oil, we notice a consolidation pattern forming following a nearly $15 price break from yearly highs. A test of support at 90.00 failed as renewed buying interest returned once prices briefly breached this psychological support level. Short-term momentum has turned in favor of Oil bulls as prices have moved above the 20-day moving average. The 14-day RSI has moved into neutral territory with a current reading of 50.03. Resistance is seen at the recent high of 95.07, with support found at 89.56.
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