Article by ForexTime
Crude oil prices continue to slide lower as dwindling demand for products are coming as supply escalates. With the European economy continuing to experience low growth, the US is the main catalyst driving petroleum demand. Despite a draw in total inventories this past week, crude oil prices slid through $75 per barrel.
Inventories actually declined per the most recent estimate from the Department of Energy. According to the EIA, U.S. commercial crude oil inventories decreased by 1.7 million barrels from the previous week. Gasoline inventories increased by 1.8 million barrels last week, and are in the lower half of the average range, and distillate fuel inventories decreased by 2.8 million barrels last week and are near the lower limit of the average range for this time of year.
Demand on the other hand was relatively lackluster. Total products demand over the last four-week period averaged over 19.5 million barrels per day, down by 1.0% from the same period last year. Over the last four weeks, gasoline demand averaged about 9.0 million barrels per day, down by 0.8% from the same period last year. Distillate fuel demand averaged about 3.7 million barrels per day over the last four weeks, down by 7.0% from the same period last year.
Crude oil prices broke through support near $75, but seems to have held near that level. Resistance is seen near the 10-day moving average at $77.17. Momentum has turned negative as the MACD (moving average convergence divergence) index generated a sell signal. This occurs as the spread (the 12-day moving average minus the 26-day moving average) crosses below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal. Look for crude oil prices to continue to test lower levels, targeting support near $73.
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