Inventories Sink Crude, Despite Uncertainty In The Middle East
Today’s Spotlight Market
Crude Oil futures continue to trade south of the $100 mark, as inventory data is expected to show plentiful supplies. Geopolitical events have had no impact on supplies and, as a result, Oil traders have largely shrugged off recent escalations. The crisis in Baghdad is very real, as Iraq remains without a succession plan and ISIS rebels control large swaths of the northern part of the country. Nouri al-Maliki has remained defiant, despite seemingly losing his position of Prime Minister and losing the support of party members. While the country has a dysfunctional government, forces have managed to keep Oil fields protected from rebels.
The large glut of Crude Oil has overshadowed the events in the Middle East, keeping price in check. The International Energy Administration, or IEA, expects consumption of petroleum to increase by 180,000 barrels per day in 2014 and 90,000 barrels per day in 2015. The agency also noted that demand growth has slowed to 700,000 barrels per day, which is the lowest level in over 2 years. This suggests that the IEA forecast could be a bit rosier than it should be.? Demand has been growing at a slower pace and, at the same time, OPEC production has been increasing.? The cartel expanded its production by 300,000 barrels per day recently, which may add to the global glut.? In the US, traders are expecting the EIA to report that inventories decreased by 1.75 million barrels. ?
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the September Crude Oil contract trading near support around the 97.00 area.? Failure to hold this support suggests prices could test the 92.50 level on the downside.? Prices have breached the 200-day moving average to the downside, which can be seen as negative.? Recent selling pressure in Crude Oil has resulted in the RSI showing oversold reading in the high teens.? In the near-term, this could be supportive of prices.
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