Crude Oil Traders Await Outcomes of Venezuelan Election, Iran Talks
???? Fundamentals
Crude Oil futures have chopped around the $90 mark in recent sessions, unable to rebound from recent losses in spite of stronger outside markets. It has been a tumultuous few weeks, even by Crude Oil’s standards. It had seemed that progress was made in talks with Iran, with the Middle Eastern nation stating that the West gave them a plan they “could work with.” Things turned sour yesterday, though, when the US envoy to the talks walked out after Iran accused Israel of genocide. This certainly does not end the talks, but does kill some of the goodwill established late last month. The death of Venezuelan President Hugo Chavez appears to have been viewed as negative for Oil prices. At least that was the knee-jerk reaction. Now many traders are awaiting the outcome of the special election to choose his successor. A victory for Nicolas Maduro, Chavez’s hand-picked successor, could be seen as positive for Oil prices, whereas a victory by Henrique Capriles, a moderate, could put downward pressure on prices. Yesterday’s EIA data showed Crude Oil inventories rising by 3.8 million barrels, versus analyst projections of a 788,000 barrel build. North America remains oversupplied with Crude Oil at the moment. Refinery runs were down 2.9%, which could be a sign that demand for Gasoline may slow from the pace earlier this year.
???? Technical Notes
Turning to the continuous chart, we see the April Crude Oil contract trading in a sideways pattern just north of the 90.00 mark. Given the preceding move lower, there is a slight bearish bias to the consolidation. This suggests that a move below the 90.00 mark could bring additional selling pressure.
Prices have been trading below the 100-day moving average over the past several sessions. A solid downside breakout here could validate the move below the average. The RSI remains oversold, which could offer some price support. However, given that the market is oversold, a downside breakout could be particularly aggressive.
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