Dollar Gains At Crude Oil?s Expense
Today’s Spotlight Market
The following are the pre-report estimates for this morning?s Energy Information Administration?s Energy Stocks Report
Crude Oil:??????? + 1.1 million barrels
Gasoline:???????? +300,000 barrels
Distillates:?????? +100,000 barrels
Refinery Use:? +0.3% to 91.5% Capacity
Fundamentals
?Oil?s wells that ends well? That?s the latest mantra for Crude bears as the recent resurgence in the value of the U.S. Dollar has once again become a major catalyst in sending commodity prices lower especially for Crude Oil. On Tuesday, the lead month July futures prices fell by over $2 per barrel after European Central Bank officials expressed a desire to increase its bond buying program in the short term ahead of what could be a period of reduced market liquidity as summer approaches. In addition, there has not been any real decline in global crude oil supplies despite prices remaining over 40% below the levels seen just one year ago. In fact, OPEC leading Oil producing nation, Saudi Arabia, is exporting at its highest levels in 10 years! Sharply lower Oil prices have helped to curtail some of the drilling in so called shale formations in the U.S. but even here, production has not fallen some have predicted. U.S. Crude Oil production totaled 9.3 million barrels per day in March vs. 8.2 million barrels only 1 year earlier.? So unless the global economy stages a swift recovery, it appears that the world will remain awash in crude for the rest of 2015. ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for July Crude Oil, we notice the uptrend line drawn from the March 18 low has been taken out on Tuesday as prices fell sharply to nearly 1-month lows. Prices are now once again below the 20-day moving average and the 14-day RSI has turned weak with a current reading of 45.93. There appears to be some solid support near the 56.00 price level but should this support fail to hold, there is little in the way to prevent a test of the 50.00 price area. Resistance is seen at the recent high at 63.62.
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