The major theme this week has been the potential for rising supply to overwhelm the expected gains in crude demand for 2018. This notion was supported on Thursday by a report from the International Energy Agency (IEA) which said global oil supply increased in February by 700,000 barrels per day (bpd) from a year ago to 97.9 million barrels per day.
The IEA also said supply from producers outside of OPEC, led by the U.S., will grow by 1.8 million bpd this year versus an increase of 760,000 bpd last year. This supply increase is more than the IEA’s expected demand growth forecast for this year of 1.5 million bpd.
Furthermore, the IEA said that commercial oil inventories in industrialized nations rose in January for the first time in seven months. Although this hardly suggests the trend is turning in favor of rising inventories, it does seem to indicate the downslide momentum generated by OPEC and Russia to cut supply may be coming to an end.
Weekly May West Texas Intermediate Crude Oil Technical Analysis
(Click to enlarge)
The main trend is up according to the weekly swing chart, however, momentum has trended sideways to lower since the week-ending January 26.
A trade through $66.02 will signal a resumption of the uptrend. A move through $57.60 will indicate the selling is getting stronger. A move through $55.90 will change the main trend to down.
The main range is $47.50 to $66.02. Its 50% to 61.8% retracement zone at $56.76…