Fundamentals
WTI crude oil continued to move lower after the substantial build (increase) in total crude oil inventories yesterday. The bears are once again back in the market as the oversupply issue comes back in focus. However, there was a late pullback on the rig count, which showed an additional 15 rigs have been taken offline.
The Nigerian oil minister stated yesterday that a production freeze could be agreed at next month’s meeting between OPEC and non-OPEC members. This is news for the bears, as a production cut is the only solution to the oversupply issue.
United States (U.S.) core durable goods orders came in lower than expected, showing the negative effects of a stronger dollar and lower oil prices on the manufacturing sector.
U.S. jobless claims came in positive, showing a strong labor market. This will further boost confidence for a Fed rate hike at the next meeting.
Technicals
The 200 SMA (Simple Moving Average) is currently at $41.88 with the initial support level at $38.47. If the market breaks this level then we could see a further drop to $34.25.
What to expect tomorrow?
Inflation data out of Japan, U.S. quarterly Gross Domestic Product (GDP) data and the Commodities and Futures Trading Commission’s (CFTC) commitment of traders West Texas Intermediate (WTI) positions.
Japanese inflation data will give an indication of how well the economy is holding up against a global slowdown. U.S. GDP will be carefully watched, as any negative data will weigh heavy on international markets. CFTC positions will likely show an increase in long positions.
- Japan Tokyo Core CPI (Year on Year) forecast -0.2%
- Japan National Core CPI (Year on Year) forecast 0.1%
- U.S. GDP (Quarter on Quarter) forecast at 1%
Developments
Unconfirmed news came out that the Iraqi oil minister resigned today.