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Crude Oil Market Analysis

June crude oil prices traded lower throughout the overnight and early morning hours, pressured by a weak outside market tone and growing concerns over an economic slowdown. This comes after preliminary Chinese manufacturing data contracted for the sixth consecutive month and German and European PMI figures also disappointed. Additionally, there were renewed Eurozone debt concerns out of the Netherlands, and that has contributed to the risk-off tone. Global equity markets were deep into negative territory and the USD was stronger against the majors. The latest trade data out of China pegged March crude oil imports from Iran were down more than 50% compared to year ago levels, and that serves to keep supply concerns on the table. The latest trade figures showed China’s crude oil demand up by more than 3.0% compared to year ago levels, but the weakest since November. Some traders indicated a level of concern in the wake of President Obama’s speech last week on a crackdown on speculation in the oil market, and that could also be having a negative impact on prices. In the meantime, June Brent crude oil slipped to a new three day low during the initial morning hours, but stands about $1.00 above last week’s breakdown to a new two month low. The Commitments of Traders Futures and Options report as of April 17th showed non-commercial traders were net long 288,393 contracts, an increase of 11,120. Non-commercial and nonreportable traders combined held a net long position of 306,874 contracts, for a slight decrease on the week. Money managers were active buyers during the report week, with prices climbing back toward the $106.00 level. That buying trend is seen as a positive force until support levels are violated. The short term charts point to a shelf of support at the $102.25 area that was able to contain weakness on two separate occasions last week. The short term trend for June crude oil favors the bull camp until the lows at $102.25 come out. Further weakness below this level brings $101.25 and the $100.00 level into focus.

Technical Analysis

CRUDE OIL (JUN): Momentum studies are trending higher from mid-range, which should support a move higher if resistance levels are penetrated. The cross over and close above the 18-day moving average is an indication the intermediate-term trend has turned positive. With the close over the 1st swing resistance number, the market is in a moderately positive position. The next upside objective is 105.71. The next area of resistance is around 104.92 and 105.71, while 1st support hits today at 103.10 and below there at 102.07.


StockMarketNews Research Team


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