Crude Oil Rally Takes PauseThe November rally has fizzled on Wednesday, as crude has posted small losses. Investors are awaiting the EIA crude inventory report, with a surplus projected of 1.9 million barrels.
Crude oil has posted slight losses on Wednesday, as the November rally has taken a pause. In the North American session, West Texas Intermediate crude oil futures are trading at $57.24, down $0.60 or 1.08%. Brent crude oil futures are trading at $63.01 down $0.56 or 0.90%.
Services PMI Beats Forecast
The services sector continues to show expansion, and the solid employment numbers seen on Friday reiterated that the industry is performing well. The U.S. Nonfarm Manufacturing PMI accelerated to 54.7 In October, up from 52.6 in the previous release. This beat the forecast of 53.5. This has contributed to economic growth at a time when the U.S. manufacturing sector is struggling and has contributed to stronger risk appetite.
API Crude Inventories Shows Large Surplus
Crude inventory reports continue to have a significant impact on crude prices. The American Petroleum Institute (API) reported a large surplus of 4.2 million barrels on Tuesday. Investors are focused on the Energy Information Administration (EIA), which has projected a gain of 1.9 million. Last week’s surplus jumped to 5.7 million and the EIA has reported surpluses in six of the past seven weeks. With supplies continuing to dwarf demand, crude could face downward pressure.
Crude Technical Analysis
On Tuesday, crude rose to its highest level since September 24, but the rally has fizzled out on Wednesday. Crude experience a downturn in the last week of October, but then broke the 50-EMA line, in what became a trend reversal, as we are currently in an upward trend.
Crude broke through the 50-EMA last week. This line, which is at $55.33, continues to provide support, indicative of an upward trend. Below there is support at $53.00. On the upside, there is resistance at the $58.00 level.