By Russell Glaser – Yesterday the U.S. Energy Administration reported the fourth consecutive weekly rise in U.S. crude oil inventories. This helped drive spot crude oil prices lower towards their short term support levels.
The price of spot crude oil closed lower at $75.12 after it reached a low of $74.75 but then bounced off the support level before the day’s end.
The weekly crude oil inventory report showed a record 37M barrels of crude held in the Cushing Oklahoma storage facility. Crude oil stocks rose by 1.9M barrels from the previous week for the fourth consecutive weekly increase. Market expectations were for an increase of only 1M barrels.
The 37M barrels of crude oil is an abnormally high amount of crude held in storage and shows just how oversupplied the market is for the raw commodity. Combined with the constant additional weekly additions, it becomes apparent that the fundamentals for crude oil have not yet shifted. Despite an increase in economic activity and refineries’ attempts to cut production, demand still has not been able to soak up the remaining slack in the crude oil markets.
As such, spot crude oil trading continues to suffer, with prices falling towards a 12-week low to the short term support level at $74.75. The next long term support level rests at $68.75.
Forex Market Analysis provided by Forex Yard.
© 2006 by FxYard Ltd
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