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Jim Hyerczyk

Jim Hyerczyk

Fundamental and technical analyst with 30 years experience.

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Uncertainty Hits Markets Ahead Of OPEC Meeting

Rig

Crude oil futures were under pressure this week after reports showed large weekly builds in U.S. petroleum products and forecasts by the International Energy Agency and OPEC indicated the global crude glut could continue to build into early 2017.

December crude oil futures fell on the news and are expected to finish the week lower. Gasoline futures posted an inside range and are in a position to close the week higher. Heating oil futures also survived negative news and are within striking distance of finishing the week unchanged.

On paper, the Energy Information Administration’s report for the week-ending September 9 looked bullish for crude oil and bearish for the products, but that assessment isn’t showing up on the charts.

What the charts do show are markets trying to hold on to the bullishness from the first half of the year. I can’t see a bear market developing despite the new forecasts, but I do see evidence that traders are looking forward enough to realize that there is hope for stabilization of production and that eventually this supply glut will go away or at least become contained.

The price action also seems to suggest that traders have become immune to the government and private sector reports. This may be why the markets have been rangebound. The theme seems to be, “hold the market in a range then react to the reports then hold the market in a range”.

It could just be the OPEC meeting at the end of the…

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