NewsCrude oil steady in Asia following Wednesday’s gains PreviousForecastAnalysisCrude oil started the day in Asia on Thursday with calm and tight range trading after yesterday’s gains on the better than expected inventories status from the United States.
Crude continue to hover around its highest in a week in Asia, consolidating the gains and hovering around opening levels. Crude oil contracts for June settlement hover around $99.92 a barrel after starting the day at $99.74 and recording the high of $100.51 and the low of $99.65 a barrel. The more active July futures are currently trading around $100.38 recording the high of $100.96 and the low of $100.09 a barrel from opening levels of $100.18 a barrel.
We can see crude correcting some of the heavy losses endured in the past two weeks as woes ease over the pace of the slowing global recovery and refocus on demand and supply outlook. The dollar was marginally weak yesterday which supported crude to sustain the gains longer.
Support was seen from the weekly EIA inventory status report, where commercial crude oil inventories remained unchanged from the previous week. At 370.3 million barrels, U.S. crude oil inventories are above the upper limit of the average range for this time of year. Total motor gasoline inventories increased by 0.1 million barrels last week and are in the lower limit of the average range.
The volatility remains high in the market and investors are wary over the outlook for crude. Crude bulls are still cautious and many see that the correction still has downside targets to be reach, as crude readjusts to the current fundamentals and offsets the unrest in the MENA and crude shortages after Saudi compensated the decline in supplies.
We saw marginal support from the reported shutdown of Canadian pipeline due to wildfires in northern Alberta. The pipeline carries crude from oil-sands projects and may cut more than 55 thousand barrels of daily output.
The data provided temporary relief for crude to correct some of the bearishness seen. The volatility in markets remains extensively high and the outlook for the global recovery is pressured by pessimism which is still keeping the general bias for crude to the downside.
Technically and fundamentally, crude lacks strong momentum to determine the next big move as we can see the range trading likely to be dominant in the coming period; investors fear the slowing recovery while at the same time hesitant to go bullish on crude amid downside pressures and market volatility despite seen consumption and demand. Technically as we see crude will likely remain among $105.10 and $96.60 a barrel where the failure to consolidate above or below those levels consecutively will mean crude is still confined within the range awaiting markets confirmation over the outlook for the recovery and demand.