Russia, FOMC Lift Crude
???? Fundamentals
Crude Oil futures have been on the rise over the past few weeks, as some traders viewed the late February sell-off as excessive. Tuesday’s API data showed a surprise drop in Oil inventories, making yesterday’s decline of 286,000 barrels of Crude no surprise to traders. Initially, many traders were looking for a roughly 2-million barrel build in inventories.
Oil also received a boost from signs that Russia would be willing to bail out Cyprus, with or without ECB support. The small island nation makes up an inconsequential half of a percent of the Eurozone economy. However, it is the psychological impact of a potential default that has some traders worried.
It is a reminder that the Eurozone and global banking system is far from healthy. Russian intervention lets traders breathe a collective sigh of relief. Nuclear talks with Iran seem to be at an impasse, which can likely be seen as bullish for Oil prices. There has been some talk of easing.
???? Technical Notes
Turning to the continuous chart, we see Crude Oil confirming a double-top formation in mid-February. Since confirming the pattern, prices have come down to make the measured move, and have now bounced back due to oversold conditions.
The recent move higher has resulted in prices bumping up against the 50-day moving average. If prices can break out above the average, Oil may gain some additional momentum. The momentum indicator has not moved higher as sharply as prices and RSI, hinting at possible near-term weakness.
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