Weekly Crude Oil
October crude oil futures continued to consolidate on the weekly chart after reaching a low two weeks ago at $92.50. Speculative investors may conclude that this is a buying opportunity, but trend traders are likely to treat any rally as the next potential shorting opportunity.
End-of-the-month position squaring and profit-taking by hedge fund and other money managers are helping to stabilize the market following the prolonged break in price and time from the June top at $105.55. However, the biggest influence on the market last week was the surprise drawdown in supply.
The latest U.S. Energy Information Administration supply and demand report showed a greater than expected decline of 2.07 million barrels the week-ended August 22. Traders were looking for an increase of 1.1 million barrels.
Helping to put a lid on any substantial upside action was the rise in inventories at Cushing, the delivery point for U.S. crude futures. Its inventories rose 508,000 barrels.
Technically, the market is finding support at $92.82 to $92.50. The key area that has to be overcome is $95.13 to $95.55. If buyers can sustain a move over this area then the market may challenge the next key level at $97.12. Despite the possibility of a short-term rally, both the fundamental and technical pictures are not signaling the return to bullish conditions.
Short-term speculators may be able to play the upside for 1 to 2 weeks during this position…