Wednesday’s Technical Analysis For: WTI Crude Oil (USO)
$OIL, $USO
WTI Crude Oil prices declined 3.87% Vs the USD closing at 44.51 bbl Monday.
The energy component pared its losses, after the OPEC’s Secretary-General, Abdalla Salem el-Badri, stated that global investments in Crude Oil will fall by $130-B this year, thus reducing the global supply glut.
I do not see that petroleum industry CAPEX cut doing that, as it is aimed at the very expensive deep ocean exploration and production. Crude Oil needs to be priced at 100 bbl plus for that work to proceed, so it looks like more money will be cut from those budgets say another $70 to 100-B.
The EIA reported in its monthly outlook that the US Crude production declined 1,20,000 BPD in September, compared to August, thus reaching its lowest marks since September 2014, and that comes from the shut down of expensive high tech tight Oil production.
WTI Crude Oil prices found some support, after the American Petroleum Institute (API) reported that US Crude Oil inventory declined by 1.2-M bbl in the week ended 2 October, Vs an estimated gain of 2.5-M bbls, not a significant number considering the record number of bbls in storage.
In the Asian session, at GMT0300, the WTI Crude Oil is trading at 49.10, or + 10.31%.
WTI Crude Oil is expected to see 1st support at 46.76, a break there will push it to next support at 44.42.
WTI Crude Oil is expected to see 1st resistance at 50.41, a break there may drive it to the next resistance at 51.72.
WTI Crude Oil is trading above its 20 Hr and 50 Hr MA’s.
Crude Oil has fallen this year and US gasoline demand softened. WTI Crude Oil could fall to as low as 10 bbl as the Organization of Petroleum Exporting Countries (OPEC) engages in a “Price War” with rival producers, testing who will cut output 1st.
Iran is soon to release 53-M bbl to the market and will be producing up to 1.5-M BPD in 6 months or so.
Long term outlook for both Brent and WTI Crude Oil is due South.
OPEC says it will cut production, and are going to see who can stand lower prices longest, since October of 2014 HeffX-LTN sees that Crude Oil is likely is headed for 20 – 22 bbl in the mid term.
Stay tuned…
HeffX-LTN
Paul Ebeling
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