Today (10/8), oil price suffered some losses due to rising concerns over a persistent supply glut in this commodity.
On Wednesday trading session in Asia, the US benchmark – West Texas Immediate crude (WTI) – plummeted strongly after being stuck in a very narrow range, falling far from the open price of $43.23/barrel.
Fig. WTI D1 Technical Chart
In the middle of Tuesday (9/8), crude oil prices were knocked down as the Energy Information Administration (EIA) said in its monthly energy outlook that U.S oil supply would register at an average of 8.73 million barrels per day (mbpd) this year, compared with the reading of 9.4 mbpd in 2015. However, the data represented a higher amount of output than the forecast figure of 8.61 mbpd according to the agency’ prior outlook.
With the oil price rallying above $50 per barrel in the middle of this year, U.S producers started to put more drilling rigs to operate. According to the report from Baker Hughes Inc, the number of oil-rigs in the U.S increased for six straight weeks by 7 to 381 for the week ending on August 5th.
Fig. Oil rig count in the US ( According to: Baker Hughes Inc)
On Monday (8/8), the president of OPEC announced that there would be an informal meeting among 14 members in the group taken place at the International Energy Forum in Algeria on September 26th-28th. Although the meeting is expected to reach a consensus of cutting the total oil production which seemed to be at full tilt, the markets turned to be skeptical of any unified agreements. While Saudi Arab, OPEC’s kingdom, repeated that it would accept any deals only if all OPEC members agreed, Iran would not put any halt at its oil supply with a view to defending for market share. Some analysts said that the September meeting would prove to be nothing but empty talk.
Later today, EIA is due to provide weekly U.S. inventory data for the week ended on August 5th, with the U.S crude oil stockpiles being anticipated to fall by 1.3 million barrels after increasing unexpectedly 1.4 million barrels in the preceding period.
Fig. WTI H1 Technical Chart
After a short period of time acting quietly, the bear came in drastically and took the lead in the market, dragging down the price of WTI. RSI (14) is heading towards the oversold threshold, indicating that the sellers’ momentum is very strong. This is not to mention the two moving averages lying over the price action, casting a shadow on the commodity. Further declines to the firm support of 42.50 are awaited as the PFM signal trend has formed a red arrow above the price chart early this day today, encouranging short positions on WTI.
Analyses of Group Fiinvesting
Download PFMTools here and check out your trading skill level