Crude oil fell to 78.31 dollar a barrel yesterday due to the growing worries about the economy slipping into recession. Weakness in stock market prompted the concerns over corporate profits, also seen as an indicator of potentially weaker demand for energy products.
The decision from US government to inject more money in to country's ailing banks could not support the view of increased energy consumption demand.
At the same time the International Energy Agency (IEA) on Friday cut its oil demand growth forecast for 2008 to the lowest rate in 15 years, citing economic weakness and "a spiralling liquidity crisis." According to the report World oil demand is expected to average 86.5 million bpd in 2008. The agency also lowered its growth forecast for 2009 as well, cutting the prediction by 190,000 bpd to 690,000 bpd.
According to the US Energy Information Administration, Domestic commercial supplies of crude surged 8.1 million barrels to 302.6 million barrels in the week to Oct. 3. The rise was more than triple the forecasts by analysts for a 2.3 million barrel increase.
Gasoline stocks rose 7.2 million barrels to 186.8 million barrels last week which is more than six times the 1.1 million barrel increase analysts had forecast in a Reuters survey.
Light, sweet crude oil for November delivery in the New York Mercantile Exchange traded in the range $84.83 - $78.31, before settling at $78.61 a barrel yesterday.
Oil price had touched an all-time high of $147.27 a barrel on 11th July but has corrected from there in the succeeding weeks.
Weekly Crude Oil (DWTI Oct.)
Last week crude oil closed at 78.75.Resistances are $83 $89, $95, $100, $105.60, Supports are $70; $66 and 62 oil price remain weak below $83.
DWTI (Oct) traded in the range $84.70 - $78.50 and closed at $78.63.
TECHNICAL OUTLOOK (Intra-day)
DGCX Crude (OCT) - Bullish above $80.40; bearish below $79.80
Courtesy: JRG Wealth Management
