The Energy Department said crude output rose 11,000 barrels a day to 6.52 million last week, the most since December 1996. Thus the crude oil futures market has taken a beating this morning, down almost 3% as of this writing. Technically, we note that the key upper pivot levels of $94 and $93 have held prices down nicely and now we look to the next downside target of $88 to be hit. $93 is our key level we are watching closely here.
If supplies continue to hold at high levels, and crude can stay below $93, our longer term level to be potentially approached is $82. $82 was the breakout point for the rally which started in late June 2012 and ended when prices jumped above $100 in September, but couldn’t hold the rally beyond the key level of $100. Oil can make big moves very fast, so we would not be surprised to see more sellers come in to bring this market lower.
The related markets of RBOB, Heating Oil, and Natural Gas are all down big this morning, with the highly volatile natural gas leading the way down after a short-crushing rally these past two weeks. Natural gas is down almost 5% and heating oil is down around 1.4% as of this writing. The seasonal play of RBOB heading lower this time of the year looks like it could be materializing with the steep RBOB drop today of 6.5 cents.
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