Crude Prices Under Pressure, Slip to 1-Week LowCrude oil has dropped for a second straight day, falling below the $56 level. Will the downtrend continue?
Crude oil has sustained losses for a second successive day. In the North American session, West Texas Intermediate crude oil futures are trading at $55.87, down $0.97 or 1.72%. Brent crude oil futures are trading at $61.44, down $1.20 or 1.30%.
Investors Eye FOMC Minutes
On Wednesday, the Federal Reserve will release the minutes of the most recent policy meeting, which took place at the end of October. At the meeting, the Fed lowered the benchmark rate to 1.75%, the lowest level since May. This also marked a third straight rate cut, but at the same time, the move was considered hawkish, as policymakers sent a signal that they were taking a pause from trimming rates. The Fed said that the economy was “in a good place”, but also stated that “uncertainties about the outlook remain”. The minutes are sure to provide insights into the Fed’s take on the economic picture, and traders should treat the minutes as a market-mover. Meanwhile, Fed Chair Jerome Powell met with President Trump on Monday. Trump has criticized the Fed, saying that rates remain too high. For his part, Powell reiterated that he would continue to be guided by the twin goals of stable inflation and maximum employment.
Ahead – Crude Inventory Reports
Investors have been monitoring U.S. crude inventory reports, a key gauge of supply and demand pressures on crude. The Energy Information Administration (EIA) has reported surpluses in all but one of the past eight weeks, as crude stockpiles remain at high levels. Another surplus on Wednesday could extend crude’s current downward move.
Crude has pushed below support at 56.50 on Tuesday and is currently at a 1-week low. The 50-EMA, which has provided support, is vulnerable at 55.87, just below where crude is situated. Below, there is support at the round number of 55.00. On the upside, the 200-EMA is just above where crude is trading, at 56.97. Higher up, there is resistance at 57.65, followed by resistance at 58.15.