October Crude Oil broke down on Wednesday, August 31, as US crude oil inventories surprise with a larger than expected increase. The EIA report showed overall crude oil inventories increasing by 2.276 million barrels last week, much larger than the 1.3 million barrel increase expected. Cushing, Oklahoma inventories declined by 1.039 million barrels and gasoline inventories declined by 691,000 barrels, much less than the 1.25 million barrel decline expected. Distillates rose by 1.496 million barrels much higher than 275,000 barrels expected. US production declined by 60,000 bpd to 8.488 million bpd.
Traders responded negatively to the report and took price below the MA support levels and past the 45 handle to a new low for the move at 44.51. Crude Oil is near the 50% retracement level (44.27) of the rally from the August 3, low of 39.19 to the August 19 high of 49.36. Crude Oil also broke down through and closed below the upward sloping trendline at 45.58. If Crude oil can’t hold the 50% retracement level, I look for it to test the 61.8% retracement level at 43.07. Resistance is at the 50 DMA at 45.30 and then the trendline, now at 45.90.
Daily Pivot Points for 9/1/16
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