Oil Price Digest 20-Mar-17

Crude Oil

There was no other data to assuage market fears of a limited rise in crude price, if at all.  Baker Hughes data showed that 14 new rigs were pressed into service, thereby reinforcing the expectation of higher US production offsetting supply cuts.  Secondly, speculators cut their long positions in WTI by 86,000 contracts. This is the biggest reduction in one week ever!  An analysis by Reuters showed that supplies of crude oil to Asia in March had increased to 714 million barrels in the month of March, up 3% from December supplies.  This would suggest that the market is awash with oil notwithstanding the production cuts.

Technical Analysis

Technically, both the daily and the weekly charts show Brent crude sitting on critical 200 Day and 50 Day moving averages respectively.  The daily charts have been showing doji candles for the last couple of days where as the weekly chart has shown a doji candle after a long filled candle.  These are reflective of the uncertainty prevailing in the market.  The single clue that may be drawn from a comparison of this charts is that the weekly MACD (not shown here) seems to have increased inspite of having a positive candle for the week.

Supports for Brent lie at 50.92 and then 49.98 below.  Resistances are at 51.94, 54.37 and then 58.30 for now.
Naphtha