Article by ForexTime
Crude futures hit a new six-and-a-half year low of $38.70 following a more-than 3.5% decline. The decline reflects global growth concerns as China-led global stock dive intensifies. There has reportedly been a sharp rise in non-commercial short positioning, according to the most recent commitment of traders report. Other commodity prices are also down sharply today, while even gold is showing moderate losses, apparently as a consequence of some investors having to sell to cover margin calls.
Crude oil price broke through trend line support on Friday breaking through the $40 dollar level for the first time in 6-years. The increase in drilling rigs reported by Baker Hughes led to the initially selloff below the psychological barrier.
Technically, crude oil prices broke through trend lows a momentum turned negative. The MACD (moving average convergence divergence) has generated a sell signal as the spread (the 12-day moving average minus the 26-day moving average) crossed below the 9-day moving average of the spread. The index moved from positive to negative territory confirming the sell signal.
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