Crude Oil Commentary – Thursday, November 16


China Concerns Hurting Oil OutlookCrude oil is trading lower as we head through the back end of the week. Following a strong start on Monday, prices soon topped out and reversed lower as concerns over US and Chinese demand took hold, exacerbated by the EIA reporting a large inventories build.  In China, data this week showed that new home prices fell for a fourth straight month, weighing on the demand outlook. Concerns around the health of the property sector have been front and centre since Country Garden, one of the largest Chinese property developers, defaulted on debt payments last month. US Economy Cooling?In the US, a further fall in inflation last month, coming hot on the back of weaker-than-forecast jobs data at the start of the month, has strengthened the view that the economy is starting to cool. With US crude production still at record levels, a softer demand environment is exerting plenty of bearish pressure on crude currently, despite a weaker USD.   Huge EIA SurplusThe EIA hit markets with a double barrel report on Wednesday. The delayed report from the prior week posted a huge 13.9-million-barrel surplus, while the current week posted a further 3.6-million-barrel surplus. The data serves as evidence of the slowdown in US demand and the impact of those soaring production levels. On the back of this data, crude looks likely to stay pressured into next week though a fresh turn lower in USD should offer some support. Technical Views  CrudeThe sell off in crude has seen the market breaking back below the 77.64 level for now. With momentum studies bearish, the focus is on further move lower while below the level, with 72.61 the next support to note. Bulls need to reclaim 82.59 to negate this view. More By This Author:Gold Commentary – Wednesday, November 15
U.S. Market Commentary – Wednesday, Nov. 15
U.K. Market Commentary: Wednesday, November 15

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