|Analysis||Crude oil little changed above $69 a barrel, after declining for nine straight sessions, ahead of important U.S. data.|
Oil is continuing its downside trend, marking its longest stretch of losses since July 2001, as demand on inventories declined and the U.S. dollar rebounded. The EIA report released last week showed that gasoline inventories increased by 2.2 million barrels, the highest since April, while distillate fuel inventories increased by 1.6 million barrels. Later on today, the API report will be released, while the EIA report is due tomorrow.
Eyes are on the industrial production and capacity utilization reports released today in the U.S. which are anticipated to show improvement.
On the other hand, the U.S. dollar is continuing its powerful rebound that started since the release of the NFP report. Meanwhile, the greenback is impacted by the U.S. news and not as a refuge. The vivid recovery signs in the U.S. are expected to boost the dollar more, thereby putting more downside pressure on oil which is expected to decline to $65 a barrel in the coming days.
After the stellar data released recently in the U.S., there are speculations that the FOMC might stop quantitative easing and start adopting tightening monetary policy soon. Tomorrow, the interest rate will be set after two-day meeting by the FOMC.
Currently, oil is traded at $69.47 recording a high of $69.87 and a low of $69.30. The black gold is now moving in an oversold area according to the Stochastic Oscillator momentum indicator, while it is expected to gain support at $65 and resistance at $70.