Mixed Signals For Crude
Today’s Spotlight Market
Crude Oil futures are lower this morning, following the lead of the equity markets.? The Oil market has been especially choppy of late, due to the erratic activity in stocks and indecisiveness over supplies.? Traders have been trying to make sense of the near-term supply glut ahead of the refinery maintenance season, which typically adds to supply, while also weighing expectations of a production slowdown.? According to a report from Wood Mackenzie, roughly $1.5 trillion in Oil and Natural Gas projects are at risk due to the price slump. The Federal Reserve?s decision to keep interest rates steady has been negative for the Oil market. While the move from the central bank could be seen as negative for the greenback, traders are concerned about the economic outlook and its effect on energy demand.
Fundamentals
The supply glut in Crude Oil is not going to get worked down soon as we enter the refinery maintenance season.? Historically, the period between the September and October sees a significant decrease in refinery input.? Without an equally large slowdown in production, inventory levels could continue to swell.? Some traders have begun to look at Oil prices with a longer-term view, which has been supportive of prices.? US production is expected to fall, with the rig counts being at current levels and OPEC running near capacity, meaning there is nowhere to go but down for the cartel.? According to Baker Hughes, the number of active US Oil rigs dropped by 8 last week to 644.? This marks a decline of 957 rigs from last year.
Technical Notes – View Today’s Chart
Turning to the chart, we see the November Crude Oil chart continuing to consolidate into a tighter range.? This has resulted in a triangle pattern on the daily chart.? A breakout from this pattern could result in 6.50-7.00 move in Oil prices in either direction.? Currently, the oscillators sit at neutral levels.
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