• 15 mins Shell Restarts Bonny Light Exports
  • 2 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 8 hours Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 13 hours British Utility Companies Brace For Major Reforms
  • 17 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 19 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 20 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 21 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 22 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 23 hours Rosneft Signs $400M Deal With Kurdistan
  • 1 day Kinder Morgan Warns About Trans Mountain Delays
  • 1 day India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 2 days Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 3 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 3 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 3 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 4 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 4 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 7 days Trump Passes Iran Nuclear Deal Back to Congress
  • 7 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 8 days Renewable Energy Startup Powering Native American Protest Camp
  • 8 days Husky Energy Set To Restart Pipeline

Breaking News:

Shell Restarts Bonny Light Exports

Crude Oil Analysis for the Week of September 5, 2011

Crude Oil Analysis for the Week of September 5, 2011

Crude Oil futures fell on Friday after the U.S. released a dismal jobs report, but still managed to close slightly better for the week. The reaction by traders strongly suggests that a weakening economy will diminish demand, leading to lower energy prices over the near-term.

The recent three-week rally appears to have come to an end after the market completed a 50% retracement of the break from 101.00 to 76.15 at 89.90. Technical expectations were for a rally into 88.58 to 91.51, and the market accommodated with very precise rally into this zone. Additional resistance comes in at a downtrending Gann angle from the 101.00 top at 89.00 this week.

Although a lower close on the weekly chart would have been a stronger sign of weakness, the close near the weekly low suggests a follow-through break may occur this week. Based on the short-term range of 76.15 to 89.90, Traders should watch for a minimum break into a retracement zone at 83.03 to 81.40. An additional downside target is an uptrending Gann angle at 84.15.

Bullish traders will be hoping the market forms support inside the retracement zone; however bearish traders are likely to treat it as a pivot, meaning a break through it will signal a weakening market and likely set up a break below 80.00.

Factors Affecting Crude Oil This Week:

• Economic Reports. Last Friday’s bleak U.S. Non-Farm Payrolls report is another sign that the economy may be slipping into a recession. This will be bad for demand. The ISM Services report will be released on Sept. 6. Traders are looking for a decline from 52.7 to 51.00. Even though a decline will indicate a weakening economy, traders will react more to how close it comes to the estimate. Overall, however, a reading below 50 will be extremely bearish for crude oil. On September 7, the Fed will release the Beige Book. This report will give traders a region-by-region outlook for the economy. Once again, traders will be looking for a ray of light in the economy.

• Weather. Next week the U.S. will be reaching the peak of hurricane season. Last week, a hurricane in the Gulf shut down production operations. This helped underpin the market, but by Friday, the break showed clearly that the market was more focused on the economy rather than the weather.

• Supply and Demand. Last week a huge drawdown in gasoline inventories drove up crude oil prices. This was the result of consumers topping their tanks ahead of Hurricane Irene. This week’s report is likely to show a drawdown in crude oil as refineries step up production to make up for the short-fall. Although this is potentially bullish, it is a short-lived condition so traders aren’t likely to commit to the long-side in a big way.

• U.S. Dollar. A weaker Dollar may also underpin crude oil, but because the economy continues to weaken, it is likely to only slow down the rate of decline.

• Federal Reserve. This is a little early since the Fed doesn’t meet until September 20 to 21, but now that the economy is clearly on a decline, look for the Fed to propose additional stimulus. Speculation that this would occur drove up demand for risky assets last week, helping to boost crude oil prices.

By. FX Empire

FXEmpire.com is the Forex flagship site of the FX Empire Network. The FX Empire Network provides readers with the most expert and most timely technical analyses, fundamental analyses and news-pieces; this in order to empower them to make for themselves the best possible financial decisions. The FX Empire Network’s other flagship sites include: StocksEmpire.com and CommoditiesEmpire.com.




Back to homepage


Leave a comment
  • Anonymous on September 05 2011 said:
    The high oil prices are the cause of the recession and the decline in the oil price, still has a long way to go.
  • Anonymous on September 05 2011 said:
    That's right, Earl. A weighted average of the WTI and Brent prices probably gets you a price of $100/b. That's to high, given the weakness of the Global economy.

Leave a comment




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