Crude Oil Price Drops For Sixth Straight Week, Most In 3 Years

Fundamental Forecast for USOIL: Neutral

Talking Points:

  • The ONE Thing: Escalating tensions between China and the United States continue to weigh on prospects of global demand for crude at the same time supply is returning to the market...
  • Six straight weekly losses would account for the longest losing streak in oil in three years
  • Per BHI, U.S. total count to 1057 from 1044; US Crude Oil Drilling Rig Count to 869 from 859
  • The technical picture warrants focus for strong bullish support at 200-DMA ($65.71)

The pressure in the physical oil market continues to lessen as the price of the front-month oil contract has fallen for the sixth week when looking to week-over-week changes in price. The future’s calendar spread between December 2018 and December 2019 dropped to the tightest (less buying pressure in the near-term) in Brent crude in nine months with the WTI equivalent seeing the tightest level since June.

Next week, OPEC is set to issue their monthly oil report on Monday on the same day as the EIA’s monthly Drilling Productivity Report. The next day, traders will get Chinese Data released at 10:00 Beijing time (22:00 ET August 13.)

The IEA, who advises most of the world’s major economies on energy noted in their monthly report this week that, “Concerns about the stability of oil supply have cooled down somewhat, at least for now.” Most of this is due to OPEC, and strategic alliances like Russia have boosted output so that supply shortage (and bullish prospects for traders) are falling.

Crude Oil Chart Tests 200-MDA Support

(Click on image to enlarge)

Crude Oil Price Drops for Sixth Straight Week, Most in 3 Years

Source: Bloomberg

The drop in crude oil has yet to surpass anything witnessed in prior months. The price is approaching the 200-DMA as support. Only a break lower followed by an inability to move above the strong-handed 200-day price average could make a sufficient argument that we may not see oil trade above $70 for some time.

1 2
View single page >> |

Once again, WTI and Brent crude has become the market everyone is discussing! Unlock our forecast ...

more
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.

Comments

Leave a comment to automatically be entered into our contest to win a free Echo Show.