Global macro overview for 17/05/2018

The price of the oil barrel in New York approaches 72 USD. This means that the crude oil in this quarter recorded a two-digit increase and its prices since the end of December 2017 increased by almost 20%. The crude oil price is, in effect, the highest in more than three years.

According to the data of the US Department of Energy, supplies of gas in the week (5-11 May) fell (contrary to expectations built on the basis of the API Report) by 1.4 million barrels. This is a result close to the average change in inventories in this period of the year recorded in the last five years. It is worth noting, however, that in his aftermath stocks are 10 million barrels lower than their five-year average. At the same time, it should be remembered that for a long period of oversupply of oil, the average has dropped significantly in recent years. The data, however, confirm the rapid balancing of the gas market, as the current availability of raw material is almost 90 million barrels lower than last year.

The main driving force behind the tightening of the stock inventories in the US is the new oil export records. Last week its volume reached a record 2.57 million barrels. For comparison: its annual change is as much as 136% (almost 1.5 million barrels). The widest brent spread - WTI, which is over USD 7, is the factor that drives the demand for US oil. At the same time, mining in the United States set a new historical record close to 10.75 million barrels/per day. We are also dealing here with gigantic increases because production is a dozen or so percent higher than last year and there is no reason to expect that mining activity will stop growing. This will eventually end up in higher than current oil prices, that might even reach $100.

Let's now take a look at the Crude Oil technical picture at the H4 time frame. The market has made another higher high at the level of 72.28, but the momentum does not follow the price and the bearish divergence is clear and visible. This technical situation might lead to a temporary pull-back towards the technical support at the level of 70.24 and even 69.65. The extremely overbought market conditions support the bearish bias.

analytics5afd557af2de6.jpg

The material has been provided by InstaForex Company - www.instaforex.com