Oil Set For Range-Bound Trading?
Today’s Spotlight Market
Crude Oil futures have been sliding after the EIA announced a smaller than expected rise in inventories for the prior week. After rallying for over a month, profit-taking and downsizing of risk has resulted in prices falling back over recent sessions. It will be interesting to see how Crude Oil trades over upcoming sessions in light of recent weakness in the US Dollar. Trading in Crude Oil has deviated a bit from its standard inverse relationship with the US currency.
Fundamentals
Last week?s EIA report showed a build of 2.3 million barrels of Crude Oil, which fell short of the analysts? estimates of a 2.5 million barrel build. The total U.S. commercial Crude inventory of 534.8 million barrels is historically high for this time of year. The bigger story is Gasoline. Inventories decreased by 2.5 million barrels the week ended March 25. Total motor Gasoline supplied averaged roughly 9.4 million barrels a day over the last 4 weeks. This measure of consumption is up 5% over the same period last year. Even with the drawdown, Gasoline inventories remain above the 5-year upper average range. Refineries are running at 90.4% capacity right now, with a daily input of 16.2 million barrels of Crude Oil. Utilization is up 2% week over week, which could be a sign that Gasoline demand is on the increase. It also could be a sign that maintenance season is winding down and largely behind us. The US Dollar Index is approaching a key technical support level near the 94.00 mark. If the USDX breaks support here, there could be renewed selling vigor in the Dollar, which may, in turn, act as a catalyst for Oil prices.
Technical Notes? -? View Today’s Chart
Turning to the continuous chart, we see Crude Oil failing to regain upward momentum after testing resistance near 43.00. The recent close below the 20-day moving average suggestis that a near-term high may be in place. The front-month May contract is heading toward near-term support between 33.85-35.00.
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