Crude Production Ramps Up
???? Fundamentals
Crude Oil futures are at their lowest levels in four months on rising supplies and weakening equity prices.
The bloodbath in the metals markets along with increased metal margin requirements has caused repercussions around the commodity world, triggering margin calls and forcing some longs to liquidate. This was certainly an inopportune time for the EIA to report an output increase to 7.2 million barrels a day. This is the highest output level since 1992.
It has also been no surprise to anyone following the energy markets that North America is swimming in Crude Oil. Many Crude bulls were banking on rising demand to help work down these inventories, which is why the second weekly demand decrease was particularly discouraging. Tightness in the rest of the industrialized world is what has kept Oil prices
???? Technical Notes
Turning to the chart, we see the May Crude Oil contract trading near support at the 85.00 mark, after breaking support at the 92.50 and 90.00 levels. The 85.00 mark is a rather important support level, as failure to hold here suggests prices could come down to test the low 80’s.
The recent wave of selling pressure has resulted in the RSI indicator moving into oversold territory, which may be supportive of prices in the near-term.
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