A combination of events help drive crude oil prices sharply lower this week. On September 1 alone, prices fell over 1 percent, putting the market in a position to end the week with its biggest weekly loss since January.
The catalysts behind the selling pressure were diminished hopes for an OPEC production freeze and the growing glut from U.S. crude stockpiles.
Traders came into the September 1 session, focusing on the previous day’s bearish government report that showed a 2.3 million-barrel build in U.S. crude stocks the week-ending August 26. This figure was more than double the 921,000-barrel increase that analysts and traders were predicting.
The selling pressure began to accelerate when the ISM Manufacturing Index for August came in at 49.4, the weakest read since January. It shows manufacturing is back into recession, which could lead to lower crude oil demand.
Finally, also helping to drive crude oil into three week lows was the idea that an attempt to reach an agreement between OPEC and Non-OPEC countries to curb production is likely to fail like it has in the past.
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Technically, December Crude Oil’s main trend is up according to the daily swing chart. A trade through $53.62 will signal a resumption of the uptrend. A move through $41.58 will turn the main trend to down.
Despite the uptrend, two major developments formed this week that could be early signs that the trend…