Crude Oil Breaks Key Support, Marks 7 Month Lows

Crude Oil Breaks Key Support, Marks 7 Month Lows

Crude Oil Breaks Key Support, Marks 7 Month Lows

$OIL, $USO

Crude Oil fell about 2% Tuesday, with Brent Crude settling at 7 month lows and WTI Crude Oil at its cheapest marks since September, after increased supply from several Key producers topped high compliance by OPEC and non-OPEC Oil producers with a deal to cut global output.

Brent Crude ended 0.89 lower at 46.02 bbl, its lowest settlement since 15 November, weeks before the Organization of the Petroleum Exporting Countries (OPEC) and other producers agreed to cut output by 1.8-M BPD for 6 months from January.

The US Crude Oil futures July contract settled down 0.97 at 43.23, the lowest since 16 September

The American Petroleum Institute (API), an industry group, said US Crude Oil stockpiles had dropped more than forecast. Prices then gave up the gains.

An official government report is due at 10:30a. EDT (1430 GMT) Wednesday.

Both benchmarks were down more than 15% since late May, when OPEC, Russia and other producers extended limits on output until the end of March 2018.

Given the expectation that you’ll see higher production levels in several areas of the world, it’s going to offset all they are taking off the market.

OPEC and non-OPEC Oil producers’ compliance with the deal to cut output reached its highest in May since they agreed on the curbs last year, reaching 106% last month.

If we see Bearish US Oil statistics this week, we could see a test of 45 on Brent Crude, and 40 and maybe 39 for WTI.

Recent data points are not encouraging, aka Bullish

Hedge fund managers have become very bearish about the outlook for Crude Oil prices as production from countries outside OPEC grows and threatens to undermine the effectiveness of OPEC’s output controls.

Managed money will continue to sell into rallies.

Stay tuned…

 

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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