Tuesday is seeing a continuation of the fall in oil prices. Brent and WTI are trading close to their supports at $47 and $43.4 respectively. Pressure on oil quotes is compounding before US reserve data comes out and the Fed meeting concludes.
By the end of the week before last, US reserves were up according to the American Institute for Oil and the EIA. Investors are presuming that the increase has continued and that reserves are too high, putting pressure on prices. Nevertheless, for the support to be broken, more than negative stats are necessary.
However, speculators are waiting for the results of the FOMC meeting and their conclusions on what to do with the US interest rate. If the rate is increased, the dollar will strengthen and down the price of oil. As we see things, it’s unlikely that they’ll increase the rate, but in any case, the slight chance that they might is piling pressure on quotes. If they do increase the rate, we will see the price of oil take a real hit.
Pressure on the price of oil will rise towards the end of today, but the price is unlikely to surpass the supports.