CRUDE OIL REPORT AND SHORT TERM FUTURE VIEW

(22ND JUNE 2012)

The U.S. Energy Information Administration said in its weekly report that U.S. crude oil inventories rose by 2.86 million barrels during the week ending June 15, well above and beyond expectations for a decline of 1.11 million barrels. Total U.S. crude oil inventories stood at 387.3 million barrels as of last week, just below the highest level since 1990.

Concerns over the outlook for global growth are also putting pressure over crude oil prices to bring them more down.  Manufacturing activity in China fell to a seven-month low in June, as exports orders remained firmly decreasing. In the euro zone, data showed that manufacturing activity in the region contracted at the fastest pace since 2009 this month, manufacturing activity in Germany slowed to the lowest level in three years in June.

Iran and Western nations have been locked in a stand-off in recent months. Delegates from the U.S., U.K., China, France, Russia and Germany recently wrapped up talks with Iranian officials to diffuse a stand-off involving Iran’s nuclear plans, two rounds of talks have ended and both sides agreed to return to technical talks on July 3.

Increasing U.S. crude supply, cooling global economy and effort to diffuse stand-off in between of Iran and western nations, sent crude oil prices falling.

TECHNICAL ANALYSIS

In international market WTI crude oil prices trading around USD78 a barrel in morning 22 June, continue falling from the high of USD110.5 a barrel made 01 march 2012.

In the chart 1 a bearish pennant pattern has given a breakout on 20th June at the level of USD82.38 a barrel to bring price more down, first support can be seen at the level of USD75.00 (a green trend line at the bottom of the chart) if that is broken another support will be around USD70.00.

 

 

CHART:1

Chart 2 showing crude oil price monthly candle chart on MCX, prices are trading far below from the 23.6% retracement level 4701 (from the low of 1680 Feb 2009 to the high of 5635 March 2012), another retracement support level will be 4123 for that we have to wait for the closing of this month, whether it’s close above or below 4701. The another crucial thing is volume, bottom widow of the chart showing volume bar, during the month of May and June volume has increased, that is supporting price fall.

CHART:2

Chart 3 showing crude oil price weekly candle chart on MCX, during the current week prices have come down below 50% retracement level 4589 and closing on daily basis has also been given below this level on 21st of June, now we are expecting another retracement support level that is 4342. Increasing volume during the past some week supporting price down move.

 

CHART:3

Chart 4 showing crude oil price daily candle chart on MCX, a very crucial bearish pennant pattern was formed with heavy volume and breakout of this pattern has been given yesterday 21st of June with very heavy volume at the level of 4623. Line of OBV (yellow line at the bottom of the chart) is also moving down faster than price that is supporting heavy price fall. The another point to be taken care is Indian Rupees value against Dollar that is decreasing continuously and somehow supporting crude oil price. There may be a small pull back to the level of around 4600.

CHART:4

RECOMMENDATION- Selling possition can be taken around 4600 to the down side levels 4350, 4123 with stop loss above 4680 at closing basis.