Supply Glut Continues
Today’s Spotlight Market
Crude Oil futures continue to consolidate, despite large supply increases. Some of the supply glut can be attributed to refinery outages and poor weather conditions affecting transport. This can also at least partially be attributed to statements from Feed Chairwoman Janet Yellen.? In her testimony in front the Senate Banking Committee, she had indicated that, while the FOMC is leaning toward a rate hike in the next few meetings,? the committee will not force through higher rates if economic conditions do not warrant doing it.? In all, Yellen’s wording in front of the committee proved to be carefully chosen to not jolt the markets.
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Fundamentals
For the seventh week in a row, Crude Oil supplies had a large increase. According to the EIA, Oil inventors had climbed 8.43 million barrels on the week to 434 million barrels. Production also increased to 9.72 million barrels a day, which is the highest production level since 1972. The increases in production, however, have been slowing, which traders viewed bullishly.?? As previously alluded, the supply glut in Crude Oil is very real, but has been somewhat artificially inflated in recent weeks due to weather conditions.? Saudi Arabia?s Oil Minister indicated that he believes that demand for? Oil will ramp up naturally. Kuwait?s oil minister said this month that the surplus in global crude supply is less than the 1.8 million barrels a day.? For this reason, he believes that Oil will recoup its losses.? Demand has been steadily increasing and rose by 2.2 million barrels a day in December. ?
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Technical Notes? -? View Today’s Chart
Turning to the chart, we see the April Crude Oil contract showing some possible bullish signs.? The RSI indicator bottomed before prices made the most recent relevant low, which hints that prices could reverse trend.? Also, the 20 and 50- day moving averages may be on the verge of crossing over to the upside.? The chart shows prices consolidating and, possibly, could be in the midst of forming a rounded bottom..
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