Crude Oil – Fundamental vs Technical Analysis
The US crude inventory data has shown that the US oil supply glut situation is becoming worse again and traders are selling the commodity on the back of this news. Moreover, President Obama has announced that he has enough votes to put the seal on Iran deal and this is another matter of concerns for crude traders who have long position. Iran has confirmed today that they will be increasing their supply by nearly over a million in the coming couple of years and this will increase the supply glut even more.
This creates a serious issue for the OPEC countries who are trying to have some sort of talks with non opec members to control the supply in order to stabilise the price. Falling oil price is going to increase the deflation problem further and 10 out 34 countries are currently suffering deflationary problems. Yes, it is true that on one hand, the consumers will have more more money in their pocket with extra supply coming on the market and driving the oil price even lower, but than on the flip side, it also increases the odds that the same consumer may actually postpone their spendings so that they bag a better price down the line- hence we have a perfect scenario for deflation.
The RSI and the MACD indicators are reading in line wight he price action which means that the bias remains towards the downside and the momentum is towards the downside. However, it is also important to not that we are also close enough to our support zone