Yahoo Finance Crude Oil Slides Below $58 – More Losses Ahead?
U.S. crude has posted sharp losses in Wednesday trade. Currently, crude is trading at $57.02, down $1.22 or 2.09% on the day. Brent crude is trading at $63.16, down $1.31 or 2.02%.
Investors Await EIA Estimate
The Energy Information Administration (EIA) weekly inventory report is an important gauge of supply and demand for U.S. crude. Out of the past five reports, four have indicated declines, which points to increased demand and has put upward pressure on oil prices. The upcoming estimate, which will be released Thursday, stands at a negligible -0.1 million, but unexpected reading could affect U.S. crude prices.
At the same time that U.S. crude stockpiles are showing declines, the story for Brent crude is very different. Although the recent U.S.-Iran skirmish remains on the mind of investors, for the time being, it’s business as usual in the Persian Gulf and the movement of crude to international markets remains unhindered. Robert Yawger, director of energy at Mizuho Securities USA, wrote on Tuesday that “there is simply too much global supply, and too little global demand for Middle East crude oil to rally the market like it is 1999”.
Leaders to Discuss Iran at Davos Summit
With a light calendar for fundamentals this week, investors will have plenty of time to follow the World Economic Forum (WEF). The summit hosts global political and business leaders and U.S. President Trump is in attendance. With leaders expected to discuss pressing global issues such as the crisis with Iran, investors keeping an eye on oil prices will be monitoring developments at the WEF. The recent flare-up between Iran and the United States saw crude prices spike upwards in the first week of January, but the gains were short-lived. Crude prices have declined 6.6% since the New Year.
Technical Analysis
U.S. crude has broken below support at 57.25 on Wednesday. This is a significant development, as this line had held in support since December 3. Below, there is support at 56.00. Above, there is resistance at 58.00. The next resistance line is at 58.75, with the 50-EMA close by at 58.87.
This article was originally posted on FX Empire
