June Crude Oil rallied during the overnight session for trade on Thursday, May 5 as fears of supply disruptions in Libya and Canada roiled the market. A stand-off between rival political factions in Libya stopped Glencore, a multinational commodity trading and mining company, from loading a 600,000 barrel supply of crude oil onto its tanker (The Seachance), and it left the port on its own accord in response. This rivalry has reduced Libyan production from a 2011 high of 1.6 million bpd to less than 400,000 bpd. The political conflict and constant attacks by Islamic State militants on oil facilities could reduce output further. These issues are well known and shouldn’t have a lasting impact on crude oil, in my opinion. If the rivalry can come together and form a government that both factions support, production should increase and add to the supply glut. Good luck with that. There are huge wildfires in Alberta’s oil sands region that resulted in the evacuation 0f 80,000 people from Fort McMurray that were in danger from the fires. This resulted in reduced output of about a third of Canada’s capacity and fears of more production to be lost. However, the fires have been far south of the major oil fields and are moving away from them. Worries about Canada and Libya quickly dissipated as US traders came on line Thursday morning and the US Dollar started to rally. Crude broke down from the high (46.04) and traded all the way down to 43.96 before recovering and settling at 44.32. Crude grinded higher after settlement and ended the day at 44.51. The failed rally puts Crude Oil in a tricky situation as we are right near support at 44.29 (the rising 13 DMA). If Crude oil can’t stay above this level, a test of support at 42.50 is possible. The tricky part is any breakdown in price could quickly be reversed if the situation in Canada gets worse and supply is unable to resume or more supply comes offline.
High – 46.07
Low – 43.96
Last – 44.51
Daily Pivots for 5/6/16:
|
R2 |
46.96 |
|
R1 |
45.73 |
|
PIVOT |
44.85 |
|
S1 |
43.62 |
|
S2 |
42.74 |
|
|
For those interested I hold a biweekly livestock webinar on Wednesday May 11, at 3pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon signup.
