Global macro overview for 09/02/2016:
Another problem for oil producers is wildly commented by the financial media. It is all about the US oil storage capacity that is currently at the critical level. For example, the storage tanks at Cushing, Oklahoma, are edging closer to their limits. The storage capacity of all seven tanks is 73.014 million barrels and they are 88% full already. This storage tanks in Cushing are responsible for 13% of the US oils inventories according to the Energy Information Administration. It looks like the US oil industry might run out of space soon and building new oil tanks might be time-consuming and not much cost-effective. In conclusion, we can clearly see more problems in the industry that suffers from a 70% drop in prices over the last year and a half. Moreover, if today's API weekly oil inventories figures, that are scheduled for release at 09:30pm GMT, exceed 3.8 million barrels, then the price will slip even lower.
What support levels can be expected for oil in the near-term according to technical analysis? Let's take a look at the daily chart. The first support comes at the level of 29.34, but the next one is the local swing low at the level of 26.08. Bears seem to be in control here as bulls failed to break out above the 50 day moving average 7 days ago, so the downtrend continues.