Crude Oil Dips Over Fears of Market Glut
FxGrow | Jun 07, 2017 23:15
Crude oil failed for the 8th consecutive session to break above $50 bp, taking a gradual decline ladder flirting with 46.70 support level, still below its 200-EMA daily level at 49.10.
Middle east tension, specifically Gulf and the media throw-stone between Arab nations was seen in two perspectives.
First market suspected that the rift could affect crude supply with shortage pushing oil yesterday to $48.38.
Second, as image was getting clearer, the thought that Gulf tension could affect OPEC cut extension with fear that the rift could result in breaking the output deal with possibility that market could witness a glut pushed oil prices lower at $46.92 bp yesterday despite OPEC's effort through media that the pact still holds and there is no fear for agreed 1.8M output cut. But markets needed more assurances, perhaps for later compliance reports which could restore confidence.
Along with that, The US Energy Information Administration (EIA) said on Tuesday U.S. crude oil production C-OUT-T-EIA could hit a record 10 million bpd next year, up from 9.3 million bpd now, putting it nearly on a par with top exporter Saudi Arabia. (Reuters).
Today US Inventories will release its data at 2:30 PM GMT which will give a better outlook on how oil prices will fluctuates for coming hours.
h2 Technical Overview:/h2Trend: Bearish / Sideways
Resistance levels: R1 48.41, R2 49.10 (200 - EMA), R3 50.04
Support levels: S1 47.30, S2 47.30, S3 46.03
Comment: Market overall remains bearish trading sideways. A penetration for R1 level sparks further attacks amid at R2 and in case market closed above R2 200-EMA level, market has shifted bullish with potential for further hikes seeing R3 destination. Closing below 48.40 is negative and hold potential dips first at S1, then S2 level, but dips should fight S2, if failed, S3 should hold. Look forward for U.S inventories today.
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