October Crude Oil tested support at the 50 DMA (44.87) during the early morning for trade on Tuesday, September 13 2016, trading down to 44.98. It then made an attempt to rally back to the overnight high (46.13) that failed at 45.74 as US traders came on board and analyzed the International Energy Association’s Monthly Report.
The IEA reduced their projections for global crude oil demand for next year by 200,000 bpd to 97.3 million bpd and for the remainder of this year by 100,000 bpd to 1.3 million bpd. The demand prospects for China and India are declining and the crude oil market will remain over supplied well into 2017.
They had previously stated the glut will disappear by the end of 2016. Crude then fell to the low of the day at 44.77 and ranged traded (45.38 to 44.49) for the remainder of the day as traders waited for the API report to come out. The API report came out and showed a smaller build in inventories than expected.
Inventories rose by 1.4 million barrels, much less than the 4 million barrel increase expected. Cushing Oklahoma inventories fell by 1.12 million barrels, much smaller than the 300,000 decline expected. Gasoline inventories also declined, falling by 2.4 million barrels, lower than the expected decline of 1.1 million barrels.
The big surprise however was the build of distillates. Distillates rose by a massive 5.3 million barrels. This confused traders as the initial rally to 45.50 stalled and fell back to end the day at 44.97.
The EIA report comes out on Wednesday morning. Support remains at the 50 DMA and then trendline support is at 44.28. A break of the trendline could lead to a test of support at 43.30. Resistance is at the 13 DMA (45.81) and then the 21 DMA (46.40).
| High | 46.13 |
| Low | 44.77 |
| Last | 44.97 |
Daily Pivot Points for 9/14/16
| R2 | 46.65 |
| R1 | 45.81 |
| PIVOT | 45.29 |
| S1 | 44.45 |
| S2 | 43.93 |