June crude oil tumbled Tuesday as fears of falling demand took hold. With weakness in manufacturing data across the globe traders are wondering if demand growth will decline and with excessive production by OPEC and Russia could the supply glut actually increase? Traders reduced long positions as analysts come to grip with prospects for a drop in global growth. The U.S. dollar rebounded off its lows today and ended in positive territory. A reversal in the dollar could lead to more selling by longs. The API Report came out this afternoon and inventories rose by 1.3 million barrels.
This was more than what the market was looking for in the report (750,000), but it was tempered by a less than expected (1.3 mb) build in Cushing inventory of just 382,000 barrels and gasoline inventories declined by 1.17 million barrels. Crude oil ended the day near its lows and is at an important support level in my opinion. The 13 DMA is at 43.77 and an ability to stay below here could lead crude to test support at 42.50. If support holds, crude could test today’s high of 45.35.
CLH16
High - 45.35
Low - 43.32
Last - 43.88
Daily Pivots for 5/4/16:
R2 46.21
R1 45.05
PIVOT 44.18
S1 43.02
S2 42.15