West Texas Intermediate currently falls below $30/barrel and on the way down to the bottom at $27.8/barrel again due to persistently weak fundamentals. There are still no bright hints from U.S. economy to emerging markets like China or Brazil. From data collected by IEA, emerging markets accounted for haft of 95 million barrels consumption in the last quarter of 2015. Sluggish economic growth leads to weak demand for oil and other commodities, push the crude oil market into long-term bearish market.
Whereas global glut remains, crude oil surplus now stands at 1.7 million barrels per day, according to Rosneft OJSC. OPEC also forecasts oversupply of 2 million barrels per day in the first quarter of the year and relieve to 1.5 million barrels per day in the second quarter. All members inside or outside of OPEC want to protect their market shares, as Iran came back from sanction and Arab Saudi insists on their decision.
Although Iranian oil minister said to support dialogue and cooperation to curb production, market experts believe no action to be done. Arab Saudi, the key member of OPEC, says nothing to confirm this information. Therefore, supports from Iran and Venezuela’s efforts just last temporarily, the price would recover slightly before back to falling.
From chart D1 Fibonacci, the oil price has plunged sharply from 23.6% level, heading downward to the bottom 0%.
RSI in chart H1 is as low as 32.09, suggesting further depreciating. Tonight, U.S. oil inventories will be released, indicating oversupply to stay for long. According to EIA, storage at Cushing as to Jan 29th was 64.174 million barrels (full 88%) and about reach overcapacity, putting pressure on the spot prices at the port. The upcoming data is expected to drag down the oil price to around $28.
Analyses of Group Fiinvesting