Oil Export Ban Repeal Faces Headwinds
Today’s Spotlight Market
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Crude Oil futures got a brief boost last week, after the House of Representatives passed a bill that repealed the ban on Crude Oil exports originally, imposed by the Energy Policy and Conservation Act of 1975. The movement to allow Oil exports has gained momentum thanks to industry lobbying, but the effort still faces hurdles. Senate approval is not a given, as legislators may cite the country?s dependence on petroleum and possible national security implications as a reason not to pass the legislation. President Obama also has threatened to veto the legislation, even if it is pushed through Congress.
Fundamentals
Crude Oil inventories rose by 4 million barrels last week, despite declining production. The increase in inventory levels is not all that surprising, given the fact that, seasonally, we are entering a slow driving season. Also, it is a period of the year when refineries undergo maintenance to switch to winter blend. Refinery input fell by 241,000 barrels per day to 16 million barrels a day in the week ended September 25th. What was a bit surprising was the increase in Gasoline inventories of 3.3 million barrels last week. If higher Gasoline inventories continue, Crude Oil prices could find themselves under pressure. The EIA is expected to show a modest build in inventory levels this week. Most estimates range between 100,000-300,000. The IEA expects the glut of Crude Oil supplies to persist through 2016, due to soft economic conditions and influx of Iranian Oil on the market.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the November Crude Oil contract briefly rallying above the $50 mark on Friday before falling back. The price action for the day formed a gravestone doji, typically signaling a price reversal. Yesterday?s sharp down session may have confirmed a near-term price reversal. The reversal comes after it looked as though prices may be on the verge of rallying, after breaking out of a triangle formation on the daily chart. Prices had been a bit overbought on the RSI ,which may have contributed to the recent selling pressure.
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