Crude & Brent Oil Fundamental Analysis October 10, 2014 Forecast

Analysis and Recommendations: Brent crude oil declined to its lowest level in 27 months on Thursday, solidifying its bear market status. West Texas Intermediate crude also closed sharply lower as it approached the low for the year at $84.01. Both markets are down 20% from their June peaks, a benchmark percentage used by analysts to define a bear market.

Rising global supplies and falling demand are the catalysts behind the selling pressure. Production is soaring in the U.S., Russia and Saudi Arabia. In the U.S. shale oil is helping to boost crude oil output the most in more than thirty years. Russia is selling crude oil to raise cash since it can’t borrow because of the sanctions imposed by Europe. OPEC production is rising. Saudi Arabia, the world’s biggest exporter, was expected to cut production, but instead slashed customer prices to Asia.

This week, the IMF reduced its global forecast for 2014 and 2015. Compounding the supply and demand problem was this week’s Fed minutes which expressed the central bank’s concerns about the slowing global economy.

The forecast is for lower prices, however, traders should watch for periodic waves of short-covering rallies. Hedge and commodity funds are extremely short, but at times may alleviate the pressure on the market by lightening up positions and taking profits. Because of the bearish fundamentals, these short-covering rallies are likely to be sold.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports 

Today’s Economic Releases 

                Currency                                                  Event                                                     Forecast        Previous

                 EUR                                          French Industrial Production                                 -0.2%             0.2%

                 GBP                                          Trade Balance                                                       -9.6B             -10.2B

                 CAD                                          Employment Change                                            18.7K            -11.0K

                 CAD                                          Unemployment Rate                                              7.0%              7.0%

                 USD                                          Import Prices m/m                                                -0.5%             -0.9%

                 USD                                          FOMC Member Plosser Speaks

                 ALL                                           IMF Meetings

                 CAD                                          BOC Business Outlook Survey

                 ALL                                           G20 Meetings

                 USD                                          FOMC Member Fisher Speaks