Brent crude oil, which is the European benchmark, hit a fresh 11-year low, at $36.08, during the European trading session and has since rebounded back above $36.50. The down-leg breached the 2008 crisis-era low, which was $36.20. Other measures of crude, including the U.S. benchmark WTI still remain above their 2008 lows. Excessive supply remains the driver of declining oil prices, with Saudi Arabia and Iran competing for market share rather than cutting production, while the U.S. last week lifted restrictions on oil exports.
EIA data last week revealed an unexpected near five-million barrel rise in oil inventories in the U.S., untypical of the normal seasonal pattern. Last week on Friday Baker Hughes reported an unexpected increase in the number of rigs online, which provided traders with a backdrop of potentially additional production coming despite lower prices.
WTI prices edged slightly higher despite the decline in Brent, and is testing resistance near the 10-day moving average at 36.26. Support is seen near last week’s lows at 34.53. Momentum on crude oil prices remain negative with the MACD (moving average convergence divergence) index printing in the red but the trajectory is flattening and could potential change direction and form a buy signal. The RSI (relative strength index) is printing a reading of 34, which is in the lower end of the neutral range.
Source:: Brent Crude Breaches 2008 Lows