$96.00 continues to be the line of importance for WTI crude oil. It served as May support, never settling below this key level. On June 15 with the large move down of $4.56 this key level of support was quickly surpassed and now since June 15th has become a key level of resistance. We have also recently broken through the 200 day moving average and most of the recent price levels are still above it. In order to validate this three-day, $6 dollar rally, we would need to settle above this $96 level in July, before we can establish a true bullish trend. At this point, resistance from the $96 level and the top of the down trend channel is maintaining control.
Many techincal charts (gas, diesel, and crude) are pointing to a bearish trend channel and might lead to lower energy prices. Of course, all trends are just that-trends, and are subject to fundamental issues popping up.
The International Energy Agency estimated that U.S. oil demand in April was weaker than previously reported, with monthly oil consumption posting its first year over year drop since November 2009, as it declined by 1.57% from April 2010. Much of this decline was caused by escalating gasoline prices which caused demand in gasoline to drop by 3.75%. The agency also estimated April crude oil imports fell to its lowest level for the month since 1997. Imports were down by 10.5% from the same month a year ago. Canada and Saudi Arabia remain the two largest suppliers of crude oil to the United States.
The Euro climbed to a three week high as the worries about Greece seem to be easing. The Euro rose against the U.S. dollar on Thursday and headed for a second quarterly gain as Greece passed crucial bills to avoid immediate default, and on expectations that the euro-zone interest rates will rise again next week. Greece approved detailed austerity and privatization bills on Thursday in a crucial vote to secure emergency international aid. The vote on detailed measures to implement 28 billion Euros in spending cuts, tax increases and privatizations passed without any of the unruly street battles which marred Wednesday’s vote on an initial austerity bill.
The latest Purchasing Managers Index showed that Chinese factory output dropped to the lowest level in two and a half years.
