Site Error was encountered. Contact the Administator

Site Error was encountered

Severity: Notice

Message: Undefined index: HTTP_ACCEPT_LANGUAGE

Filename: models/mdl_lang.php

Line Number: 24

Site Error was encountered. Contact the Administator

Site Error was encountered

Severity: Notice

Message: Undefined index: HTTP_ACCEPT_LANGUAGE

Filename: views/header.php

Line Number: 2

«AgroInvest» — News — Crude Oil Drops To Lowest Level Since 2012 Amid Excessive Supply Concerns

Crude Oil Drops To Lowest Level Since 2012 Amid Excessive Supply Concerns

2014-09-25 15:03:51

The price of Brent oil continued to fall today, hitting its lowest level since June 2012. Evidently, investors are not worried about the prospects of supply disruptions in the Middle East amid the US-led bombings of IS targets in the region, according to actionforex.com.

In fact, they appear more worried about the excessive supply of the stuff and also the weaker demand growth. The resumption of production at several oil fields has allowed Libya's export to surge in recent weeks. According to the National Oil Corporation (NOC), crude production there has risen to a good 900 thousand barrels per day. Production of oil in countries such as Iraq has also risen: according to Reuters, exports from the southern terminals have averaged 2.58 million bpd for the first 23 days of September, up from the August average of 2.38 million. On top of this, Nigeria's oil exports are expected to hit their highest level in 14 months.  In the US, WTI has been lent some support from a bullish oil report, for once. The EIA's summary of oil data for the week ending September 19 was released today, showing crude stocks decreased by a good 4.3 million barrels while gasoline inventories also fell slightly.  Although this was an unexpected drawdown, it was still slightly less than the 6.5 million barrel decline that was reported by the API last night. That's probably one of the reasons why we didn't see a more pronounced rally once the numbers were released. In fact, WTI quickly gave back the small gains it had made and was trading flat at the time of this writing.  While I expect this weaker trend to continue, the chances of a short-covering rally are increasing by the day. With the colder months now just around the corner, demand for heating may cause prices to rise. What's more, the OPEC may move to cut production of oil if prices remain persistently weak.

WTI's technicals continue to point lower, with price making a series of lower lows and lower highs. But the RSI has formed a triple divergence, suggesting the momentum may be shifting into the buyers' favour. Still, for oil to stage a significant rally, it will need to break several resistance levels first, including a bearish trend line which comes in somewhere around the $93 handle. Unless that happens, a drop to $90 or possibly even $86.75 (a Fibonacci-based support level) could be next. Meanwhile there has been yet another bearish development on the Brent contract: it has broken below $96.75 – the 2013 low. This may cause follow-up selling, by forcing some of the exiting longs to cover their positions and fresh sellers to emerge. As a result, prices may drop towards the next support at 95.00, with eventual moves down to $92.00 and $90.00 also now possible. In short, the path of least resistance continues to be to the downside for both oil contracts.
 

      

 

 

 

UkrAgroConsult