Oil Remains Weak, Further Downside Beckons

Oil Remains Weak, Further Downside Beckons

Talking Points:

  • US wanton inventories tumble though oil prolongation increases.
  • OPEC cuts and tongue now incompetent to branch a losses.
  • US wanton oil stays stranded in a downward trend.

Fundamental Forecast for Oil: Bearish

US wanton oil continues to fall, and is expected to tumble further, as shale companies continue to boost prolongation to near-record levels. After rallying neatly on Thursday on news of a larger-than-expected drawdown in oil inventories, US wanton gave behind all of a gains and now trades during a two-week low around $44.51/brl. Crude is also scarcely $3 reduce than Wednesdays high of $47.35/brl.

The latest downturn in oil was stirred by a latest information from a US Energy Information Administration that showed domestic prolongation rising by 1% to 9.34 million barrels a day, a nearby 10% year-on-year rise, and tighten to a 1970 normal high of 9.6 million barrels. The EIA has also revised down a normal cost for US wanton to $53.81 in 2018 from $55.10 final month.

In addition, while there are opposing technical signals for US crude, a trail of slightest insurgency stays lower. The mark cost has only damaged a 20-day relocating average, a bearish set-up, while a tighten next a May 4 low of $43.97 will open a approach behind to a new low of $42.55/brl. A demeanour during a stochastic indicator however shows a marketplace as ‘oversold’ and might yield some short-term support.

US Crude Oil Daily Timeframe (December 30, 2016 – Jul 7, 2017)

Oil Remains Weak, Further Downside Beckons

Chart by IG

If we are looking during oil on a somewhat longer timeframe, we can get your giveaway DailyFX Third-Quarter Trading Forecast and Trading Guide here.

— Written by Nick Cawley, Analyst

To hit Nick, email him during nicholas.cawley@ig.com

About author