China, Libya Sink Oil Prices to Start Week
Today’s Spotlight Market
Crude Oil futures started the week on a negative note, giving up 70 cents in yesterday?s trading session.? It was a turbulent trading session after pro-Russian protestors seized control of several state buildings in several eastern Ukrainian cities.?? After a lull in activity, the events sparked fears that Moscow is trying to ?dismember? the Ukraine from within, in the words of Ukrainian officials.? Fears of a Crimea-like situation have added a bit of fear premium back into prices. ?
Fundamentals
The worrisome events in the Ukraine helped boost prices during the trading session.? Crude Oil prices had actually gapped lower on Sunday evening amid concerns over the Chinese economy.? The World Bank had trimmed its growth forecast for China and other East Asian countries.? Across the East Asian and Pacific (EAP) region, growth forecasts have been trimmed to 7.1 percent in 2014, 2015 and 2016, down from the previous forecast of 7.2 percent.? The World Bank cited capital outflows and strains placed on EAP countries from slow recoveries by developed nations as reasons for the downward revision.? It looks as though some Libyan Oil will be making its way back into the supply line.? Rebels have given up the Hariga and Zueitina Oil terminals and will give up two additional ports in their control in two to four weeks.? Hariga and Zueitina can handle 110,000 and 70,000 barrels a day in shipments, respectively.? The other two terminals, in El Sider and Ras Lunaf, can handle 340,000 and 220,000 barrels a day, respectively.? El Sider is the nation?s largest port.? This can be seen as a bearish development for Oil prices in the near-term.? Traders, however, will likely also be paying close attention to Cushing, OK stockpiles in Wednesday?s EIA report.? If the destocking of Cushing continues, it may offset the fresh Libyan supplies of petroleum.
Technical Notes? -? View Today’s Chart
Turning to the chart, we see the May Crude Oil contract failing to test the March 28 relative high before falling back yesterday.? Thus far, Oil prices have held above the uptrend lines.? Failure to hold these trendlines may result in heavier near-term selling pressure.? Momentum remains below the zero line and is flatter than both prices and the RSI indicator, hinting as possible near-term weakness.? Prices have not been able to post more than two consecutive closes above the 100- day moving average.
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