Mingze Wu | Sep 12, 2013 06:36AM ET
Crude prices have been pushing lower recently with the likelihood of a Syrian war falling lower. However, it seems that bearish momentum has stalled slightly with bulls putting up strong resistance. This was especially apparent yesterday when the Department of Energy’s weekly inventory data came out on the bearish side.
Crude Inventory fell by 219K barrels for the week of 6th September, way lower than the expected 2.1 million fall. This reflects a lower implied demand in Crude, sending price lower quickly after the numbers were released. Besides crude, other energy products were doing badly as well.
Distillate inventory grew by 2.6 million vs an expected 0.6 million, while Gasoline inventories gained 1.7 million when analysts predicted a fall of 1 million. With demand for refined products falling, future demand for crude oil becomes even bleaker. However, the price of WTI was resilient. After pushing to a low of 107.14, prices recovered quickly, ending the hour above 107.5 – the ceiling of yesterday’s consolidation.
Hourly Chart
Weekly Chart
The opposite is true for bulls if we close above 108.5, with 115.0 as the 1st bullish target in the near term. However, Stochastics favor a bearish move with readings currently pointing lower after staying in the Overbought region ever since we’ve breached the 100.0 price level. If the bearish signal does take flight, with price breaking 103.0, the likelihood of price heading all the way toward the 90+ region increases. This aligns with the overall fundamental outlook which suggest lower global demand for oil.
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