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    Crude Oil – Fundamental vs Technical Analysis

    Fundamental Analysis

    Crude oil is set for another volatile session today ahead of the crude inventory data. Although most of the noise in the market is mainly about the M&A deals in the energy sector which is due to the brutally beaten price of oil. The fact is that as long as we do not see the demand keeping up with supply, the lower oil prices will persist for a much longer time.

    According to various surveys, the forecast is that the crude inventory level at Cushing may have further inflated by 1 million barrels. If the crude inventory data does show even more substantial level, this could trigger a sell off for the oil price.

    Given that Saudi Arabia is reluctant in cutting their output and they are not shrinking their discount any further to their Asian buyers, this  has triggered a similar attitude by other producers, such as Iran. Moreover, in the coming days, we could hear other Middle Eastern producers taking similar direction and this is somewhat support the argument that demand for oil may be changing the game finally.

    Technical Analysis

    The price is trading above its upward trend line on a 4 hour time frame. This confirms that the trend for this time frame is towards the upside. Moreover, it is also trading above the 50 (shown in yellow) and 100 (shown in red) day moving average and this is another confirmation of the above arguments.

    Support zone

    51.30-50.97 Minor Support

    47.70-47.05 Major Support

    Resistance Zone

    55.71-55.01 Minor  

    58.54-58.01 Major

    Crude Oil 08-04-2015

     

     


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