Crude Heavily Lower
Crude prices are on course to end the week lower after a heavy downside reversal yesterday as traders reacted to a fresh US inventories build and a shift n forecast from OPEC+. The API release came in above forecasts yesterday, showing a surplus of 1.3 million barrels over the prior week. The data has raised fresh concerns about demand levels with focus now turning to today’s EIA data which is also expected to show a surplus.
Bearish EIA Outlook
Yesterday, in its latest outlook report the EIA upgraded US output projections for the year now forecasting an even higher output record to be set this year of 13.59 million barrels per day. With demand falling below that level the group forecasts this oversupply to weigh on prices through year end before output starts to moderate next year.
OPEC Oversupply Warning
Alongside this outlook from the EIA, crude prices were also hit by a bearish outlook from OPEC. The producer cartel signalled that it expected supply to rise next year, a shift from earlier projections and warned of oversupply risks. This echoes the group’s recent decision to pause output increases following several months of consecutive output hikes. The market reaction in crude clearly shows a bearish shift in sentiment. As such, the market is at risk of a deeper move lower today if EIA data shows any above forecast inventories build.
Technical Views
Crude
The latest failure at the bear trend line from June highs and the 61.39 level has turned the market back down towards the 57.42 level support. This is a major support level for crude having underpinned the market on three tests this year. Below here, 55.07 and the deeper 51.31 level are the next supports to watch.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.