Crude Edges Lower Following Inventories but Positive Momentum Accelerates

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Crude oil prices edged lower on Wednesday following the release by the Department of Energy on their estimate of weekly inventories. Despite a strong build in crude oil, the recent builds in heat have pushed it back into the middle of the 5-year range. OPEC oil ministers expressed optimism on Wednesday about their strategy of pumping more crude oil and fighting for market share. The world oil market is closely watching OPEC’s activities in Vienna this week, as the cartel prepares to gather on Friday to decide on production levels.

Prices have reached levels in which frackers are thinking about increasing production despite the continued decline seen in rigs last Friday. Crude inventories continue to decline but remain at very lofty levels. According to the Energy Information Administration, U.S. commercial crude oil inventories decreased by 1.9 million barrels from the previous week. Gasoline inventories decreased by 0.3 million barrels last week, but are above the upper limit of the average range. Distillate fuel inventories, which include heating oil, increased by 3.8 million barrels last week and are in the middle of the average range for this time of year.

Demand for product remains robust according to the EIA report. Total products demand over the last four-week period averaged over 19.9 million barrels per day, up by 4.3% from the same period last year. Over the last four weeks, gasoline demand averaged about 9.3 million barrels per day, up by 1.1% from the same period last year. Distillate fuel demand lagged other products averaging over 4.0 million barrels per day over the last four weeks, down by 1.6% from the same period last year. Jet fuel demand is strong and was up 7.8% compared to the same four-week period last year.

The technicals on crude oil has held support levels near a downward sloping trend line just as momentum is turning positive. The MACD is generating a buy signal which should point to higher future prices .

The post Crude Edges Lower Following Inventories but Positive Momentum Accelerates appeared first on Forex Circles.

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