• 4 minutes Oil Price Editorial: Beware Of Saudi Oil Tanker Sabotage Stories
  • 7 minutes Mueller Report Brings Into Focus Obama's Attempted Coup Against Trump
  • 11 minutes Magic of Shale: EXPORTS!! Crude Exporters Navigate Gulf Coast Terminal Constraints
  • 14 minutes Wonders of Shale- Gas,bringing investments and jobs to the US
  • 8 hours Level-Headed Analysis of the Future of U.S. Shale Oil Industry
  • 40 mins Prosecutors Fine Bosch 90 Million Euros For Emissions Cheating Role
  • 13 mins Evil Awakens: Fascist Symbols And Rhetoric On Rise In Italian EU Vote
  • 27 mins Is $60/Bbl WTI still considered a break even for Shale Oil
  • 8 hours Why is Strait of Hormuz the World's Most Important Oil Artery
  • 1 hour Apple Boycott in China
  • 20 hours IMO2020 To scrub or not to scrub
  • 22 mins California's Oil Industry Collapses Despite Shale Boom
  • 20 hours IMO 2020 could create fierce competition for scarce water resources
  • 20 hours Trump bogged down in Mideast quagmire. US spent $Trillions, lost Thousands of lives, and lost goodwill. FOR WHAT? US interests ? WHAT INTEREST ? . . . . China greatest threat next 50 years.
  • 4 days Some Good News on Climate Change Maybe
  • 8 mins Misunderstanding between USA and Iran the cause of current stand off, I call BS
  • 16 hours Apple Bid To Buy Tesla in 2013 For $240 a Share
Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

More Info

Oil Market Forecast & Review 10th May 2013

Late breaking news on Thursday may have signaled the top in July crude oil as traders reacted with aggressive selling pressure. The move was triggered by comments from Fed Bank of Philadelphia President Charles Prosser. Speaking in New York on May 9, Process said he wants the central bank to start reducing the rate at which it buys bonds as soon as the next Federal Open Market Committee meeting in June.

He also added that the central bank would be “limited” in capability for more stimulus and the unwinding of the current measures would be harder than expected. This comment created uncertainty for investors, encouraging them to pare positions in risky assets and into the safety of the U.S. Dollar.

July crude oil reacted on the daily chart by selling off into the close. This completed three consecutive days of consolidation. On Friday and Monday, crude oil surged on the heels of last week’s friendly U.S. jobs report. Speculators took the news as a sign that an improving economy would lead to increased demand for crude oil.

Prosser’s comments imply that the economy has reached a positive turning point and that the Fed should consider curtailing its stimulus program effectively lifting the training wheels off the economy. If he is right in his assessment of the economy then eventually demand should pick up for crude oil as the economy improves. The sell-off today suggests that speculators may not believe that the economy is ready to take off.

Furthermore, the stronger dollar may also pressure crude prices since a higher Greenback means that crude oil will become more expensive for foreigners. This may also curtail demand for crude oil. The U.S. Dollar surged on Prosser’s statement on the thought that the easing of the Fed’s aggressive bond-purchasing program would drive up interest rates, making the dollar a more attractive investment.


(Click to enlarge.)

Technically, the main trend is down on the weekly chart despite the strong rally from $86.16 to $97.38. A breakout above the down trend line at $97.71 would be a sign of strength, but July crude oil would have to cross the swing top at $98.22 in order to turn the main trend to up.

If Prosser’s comments have brought uncertainty to the crude oil market then look for long speculators to begin to pare positions. The stronger U.S. Dollar could also curtail demand for higher risk assets such as crude. Based on the short-term…




Oilprice - The No. 1 Source for Oil & Energy News