Gasoline Crashes Through Support
Eric De Groot | Oct 01, 2014 07:14AM ET
Crude Oil and gasoline prices fell sharply yesterday (chart 1 and 2). The headlines, reacting solely to price, begin the process of providing reasons 'why' after the fact. This explanation process, directed towards retail money and completely useless in terms of price anticipation, supports the chasing of weakness and tails.
Headline: Oil Futures Slide Sharply on Supply Worries
U.S. oil prices posted their largest drop in almost two years and the global Brent contract fell into a bear market on Tuesday after OPEC oil supplies reportedly exceeded demand.
Oil prices were also under pressure as traders squared up books with the last trading day of the month and the quarter, and on the expiration of contracts for refined fuels.
Analysts and traders said investment managers appeared to be capitulating after a rout in crude markets that has seen benchmark U.S. prices fall 13% and the global Brent contract lose 16% in the quarter that ended Tuesday. The steep decline has come as domestic and global supplies have ballooned, with output from the U.S., Libya and Iraq surging to the point where the market no longer responds to usual bullish drivers such as disturbances in Eastern Europe and the Middle East.
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