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Crude Oil Weekly Fundamental Analysis, November 16 – November 20, 2015 Forecast

By:
James Hyerczyk
Updated: Nov 14, 2015, 10:46 UTC

Analysis and Recommendations:  January Crude Oil futures finished the week sharply lower on increasing concerns about oversupply. The January contract

Crude Oil Weekly Fundamental Analysis, November 16 – November 20, 2015 Forecast

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Analysis and Recommendations:  January Crude Oil futures finished the week sharply lower on increasing concerns about oversupply. The January contract closed at $41.99, down $3.48, or 7.65%. January Unleaded Gasoline was also hit by selling pressure, finishing at $1.2319, down -0.1212, or 8.96%. 

The primary driver of the selling pressure was the release of a bearish U.S. stockpiles report on November 12. Government data showed the seventh consecutive weekly build in crude stockpiles, driving futures prices into their lowest levels since late August. 

According to the U.S. Energy Information Administration, crude oil inventories rose by 4.2 million barrels to 487 million in the week-ending November 6. The surge in inventories was well above trader estimates of a 1 million barrel rise. Total crude oil inventories are now within striking distance of the modern day record high of 490 million barrels reached in April 2015.

The news out of Cushing, Oklahoma was also bearish with the key futures hub showing a 2.237 million barrel increase in supply. This was the biggest weekly increase since March 2015.

The week-ended on a bearish note as concerns over the supply glut continued to press prices lower. Oversupply is currently estimated at between 0.7-2.5 million barrels per day being produced over demand.

Also pressuring markets today was a report from the International Energy Agency. According to its Monthly Oil Market Report, there is a record 3 billion barrels in tanks worldwide and that ballooning global stockpiles of crude oil and oil products could worsen the supply glut into next year.

Finally, driller Baker Hughes announced late Friday that the U.S. rig count rose for the first time in 11 weeks. The count rose by 2 to 574.

January Unleaded Gasoline futures closed lower despite a greater-than-expected drop in gasoline inventories the week-ended November 6.

Sellers regained control last week, driving the market below the minor retracement zone and perhaps creating enough downside momentum to trigger a further break towards the contract low at 1.1763. This occurred despite an EIA report which showed a greater-than-expected 2.1 million barrel draw down in supply.

Crude oil and gasoline futures are expected to continue to weaken based on the strong downside momentum into the close. Both markets are in a position to test their contract lows. Crude oil’s target is $39.97. Unleaded gasoline’s target is $1.763. Because of oversold technical conditions, there may be periodic short-covering rallies, however, gains are likely to be limited because of the oversupply. In addition, there is not likely to be a shift in investor sentiment before the OPEC meeting on December 4.

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 recent analysis and information in our weekly reports and we provide daily updates and outlooks. 

Weekly January Crude Oil
Weekly January Crude Oil

 

Weekly January Unleaded Gasoline
Weekly January Unleaded Gasoline

WEEKLY

This Week in Petroleum
Release Schedule: Wednesday @ 1:00 p.m. EST (schedule)

Gasoline and Diesel Fuel Update
Release Schedule: Monday between 4:00 and 5:00 p.m. EST (schedule)

Weekly Petroleum Status Report
Release Schedule: The wpsrsummary.pdf, overview.pdf, and Tables 1-14 in CSV and XLS formats, are released to the Web site after 10:30 a.m. (Eastern Time) on Wednesday.

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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