After suffering from losses amid announcement of a firming US crude stockpile, crude oil futures seem to dip further after gaining back traction as it opened trading day on the green Wednesday.
Crude futures went as low as $52.76 per barrel on Tuesday trade after the American Petroleum Institute reported Tuesday that an 11.6 million barrel rise from the US crude supply was recorded last week, as stated by the people familiar with the data.
The figures reported oppose that of analysts’ survey results where the stockpile only rose by a consensus of 1.39 million barrels prior to Wednesday’s release of data by the Energy Information Administration.
The loss also came after a positive remark by Saudi Oil Minister Khalid al-Falih indicated the good progress the Organization of the Petroleum Exporting Countries and its non-OPEC partners have undertaken so as to come up with the pledged cut in production. But this positivity which could have buoyed the commodity was out weighted by the US data.
A rise to over $50 was seen in crude beginning January 1 where OPEC and other state producers commenced in slashing crude oil production output.
The commodity’s bullish streak in the recent months stimulated a US shale-oil production rebound. However, Jeff Currie of Goldman Sachs Group Inc. said in an interview that the cuts elsewhere which exceeded expectations and indications of firming demand imply that a decline in the global supply is nearing.
Crude Oil Slips Further
Wednesday trading day saw Brent crude go further down at $55.37 per barrel, which can be seen in the first chart. The international benchmark for crude oil prices is seen to be moving in a narrow trade since January 1, when the OPEC member-countries not exempted to the deal and participating non-members began the pledged output cuts. Using the Bollinger Bands indicator, the commodity is seen moving nearer its sell point of 55.08 with the mid-band and upper-band at 55.94 and 56.79 respectively.
Brent crude’s 14-day RSI currently sits mid-range at 46.76, moving downward. The 20-day Commodity Channel Index reading is situated at -106.33, breaking out a little from the oversold mark.
In the second chart, West Texas Intermediate, another international benchmark, is also moving in a narrow trading pattern with its current price at $52.56 per barrel. Nearing its lower band of 52.34, the assumed sell point, the commodity’s mid-band and upper-band are located at 53.41 and 54.48 respectively.
WTI’s 14-day Relative Strength Index lies in the median region going down at 44.63. The 20-day CCI is well below the oversold territory at -122.11.
Contradicting Implications Render Crude Volatile
The optimistic view of the energy minister of Saudi—OPEC’s de facto leader—Khalid al-Falih on Tuesday was seen as he remarked that the oil market indicators were manifesting good signs after the agreed curb has been imposed so as to reverse the effects of the glut the crude oil industry wallowed in for two years.
The group’s de facto leader had recorded a curb that goes well below what it had pledged in the deal which is 10 million barrels per day, said its energy minister. Other producers who participated in the output cut have slashed more than 1.5 million barrels per day which again surpassed the market’s low expectations, the minister added.
But to offset this optimism is not only the rise of the US shale-oil data but also the news that Iraq is set to produce 5 million barrels of oil a day by the middle of the year as announced by Iraqi Oil Minister Jabbar Ali Al-Luiebi on Tuesday.
Once Iraq reaches the forecasted level, it would pose complications with the country’s commitment to limit output as stipulated in the deal with OPEC and other participating countries.
However, the Saudi Arabian energy minister remained hopeful that these blunders would still be countered by the projected growth in oil demand within 2017, an estimated 1.5 million barrels per day.
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