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Crude Oil Market Analysis

May crude oil prices slumped to a new three-day low during the early morning hours, pressured by fresh European debt concerns from soaring Spanish Bond yields, disappointing US and Chinese economic data from Friday and further weakness in the Euro against the USD. Spanish bond yields rose above 6.0% for the first time since December 2011, and that has triggered fears over a spreading European debt contagion and weighed on risk-taking sentiment. Another downside force for the crude oil market comes from this weekend’s meeting between Iran and six-world powers over Iran’s nuclear ambitions. The result of the meeting was viewed as a positive, because it led to another meeting scheduled for late-May. Ideas that Iran is at least willing to negotiate with western nations has eased supply disruption fears in the region, and that is seen as a negative for crude oil prices. In the meantime, other nations have worked to boost production to compensate for a further slowdown in Iranian output, and that is also seen as a negative for crude oil prices. The latest estimates peg Libyan crude oil exports in May to run around 1.3 million barrels per day, similar to levels seen in April. The Commitments of Traders Futures and Options report as of April 10th showed non-commercial traders were net long 277,273 contracts, a decrease of 17,806. Non-commercial and nonreportable traders combined held a net long position of 307,262 contracts, for a decrease of 19,149 in their net long positioning. The selling trend of the speculator is seen as a negative short-term force and it also represents the lowest spec-net long positioning in crude oil since December. The price action in May crude oil confirmed a breakout above short term resistance at $103.40, and that offers the bull camp the advantage for further push toward $106.10. While that potential exists, the bears have taken the early advantage with the breakdown below Friday’s inside day trading range. Downside targeting today comes in at $101.75.

Technical Analysis

CRUDE OIL (MAY):¬†Daily stochastics are showing positive momentum from oversold levels, which should reinforce a move higher if near term resistance is taken out. A negative signal for trend short-term was given on a close under the 9-bar moving average. The market’s close below the pivot swing number is a mildly negative setup. The next upside target is 104.34. The next area of resistance is around 103.49 and 104.34, while 1st support hits today at 102.21 and below there at 101.77.

 

StockMarketNews Research Team

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