Energies Under Pressure
We are a little surprised that crude oil prices are not tracking lower this morning and returning to this week’s critical double low support at $36.16. In fact, the bearish impact from this week’s surprise US crude oil stocks build, hints that Iraq is questioning its ability to keep production restricted (because of its fragile economy), news that Russian oil flow has returned to Europe and the lack of the US Senate and the ECB to provide needed support for the economy this week leaves the bear case in a front and center position. The market should also remain under pressure as-a-result of this week’s EIA weekly crude production reading which increased by 300,000 barrels per day back to 10 million barrels per day.
With yet another downside breakout extension of the late August and early September downtrend today, the bear camp looks to have technical momentum in its favor into the last trading session of the week. In our opinion, the larger than expected weekly injection, a cooler US weather forecast and disappointing US jobs data yesterday should mean the market retains plenty of justification to trade below $2.30 in the October contract today.
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