Global macro overview for 06/07/2017

Global macro overview for 06/07/2017:

The latest American Petroleum Institute (API) inventory data for the week ending June 30th recorded a draw of 5,760k barrels after the unexpected 850k barrel build last week. The market participants expected a smaller draw of 2,500k barrels, so the data were a big disappointment and caused a sharp decline in crude oil prices. Moreover, after the recent comments from Russian Federation regarding the statement, that deeper production cuts were not required, the underlying supply conditions are starting to worry the global investors again.

Crude prices are down 16% or the year, amid signs that rising US output will undercut production cuts ordered by the Organization of Petroleum Exporting Countries and its allies. The most important reason behind the slide in prices is the surprisingly fast rate of US shale drilling expansion. The US producers have significantly increased production output and lowered their own costs faster than expected, so there is a possibility, that the significant oversupply in the energy market will continue to the end of this year and even possibly through 2018. That's why the crude oil priced might be slowly hovering around $50-60 levels and possibly falling lower in the mid-term.

Let's now take a look at the Crude Oil technical picture at the H4 timeframe. Just after the report was published the price slid towards the support at the level of $45.85 and hit the level of $44.52 before the bounce. Currently, the bulls are trying to break out above the resistance at the level of $45.85, but the momentum is still below the fifty level, so the bias remains bearish.

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