Crude Slides Below $54Oil prices remain under pressure and have fallen 2.0% on Thursday. This marks the fourth straight day of losses, as West Texas Intermediate has dropped below $54, while Brent futures are barely above the symbolic $60 level.
Crude oil has recorded losses for a fourth successive day. In the North American session, U.S. West Texas Intermediate crude oil futures are trading at $53.79, down $1.05 or 1.93% on the day. Brent crude oil futures are trading at $60.09 down $0.44 or 0.73%.
Fed Lowers Rates, but Remains Optimistic
As was widely expected, the Federal Reserve lowered the benchmark rate by 25 basis points for a third straight month, putting it in a range between 1.50% and 1.75%. The rate has not been this low since May 2018. The move was intended to boost the economy, which is showing signs of a slowdown. However, the Fed was cautiously optimistic in the rate statement, as policymakers noted that the labor market “remains strong” and that the economic growth was “rising at a moderate rate”.
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Inventory Buildup Sends Crude Lower
Crude has extended its losses on Thursday, in what has become a rough week for oil prices. WTI futures are down almost 4.0% this week, in what is shaping to be crude’s worst week since late September. The catalyst for the decline has been another sharp surplus in crude stockpiles. On Wednesday, the Energy Information Administration (EIA) reported a surge in crude stockpiles last week, with a surplus of 5.7 million barrels. The markets had expected a minimal increase of 0.5 million. The EIA reports have shown just one decline in the past seven releases, as crude supplies continue to outstrip demand. This has put downward pressure on crude prices, which have fallen over 11 percent since mid-September, when prices jumped above $61 after the attack on two Saudi oil refineries.
Crude Technical Analysis
Crude prices have broken below the 50-EMA line which is at 55.22. This is a bearish signal and could be a sign that the downward trend will continue. Below, we find support at 53.00. This line was tested in mid-October, and is again vulnerable after sharp losses by crude on Thursday. On the upside, there is resistance at the 58.00 level.