Oil prices take another turn lower as U.S crude stockpiles build
Oil prices tumbled by over three percent on Wednesday after U.S crude oil stockpiles showed a surprise increase last week, adding to the overall concerns about the rapid slowdown currently underway in the United States economy. The Canadian Dollar also took a hit against the U.S Dollar on the slide lower in oil prices, alongside many other closely linked commodity-related currencies.
Official data showed that United States crude inventories increased by 4.9 million barrels during the week ending June 7th. The move lower in oil price was exacerbated as oil analysts had been expecting to see a sizeable decrease in oil inventories, due to the expectations of higher consumption during the summer months and the ongoing possibility that OPEC would soon be announcing a supply-cut.
The United Energy Information Administration, known as the EIA, also cut its oil production forecasts globally this year. The monthly report from the EIA underscored the current fragility of the economic climate and the unintended consequences that the Sino-U.S trade and higher United States interest rates are currently having on the global economy.
West Texas Intermediate oil price has tumbled by over thirty percent since peaking above the $66.00 level earlier this year. The line-in-the-sand for WTI oil is now the $50.00 support level, with wide-spread stop losses triggering likely to occur if the psychological $50.00 benchmark is breached over the coming days and weeks.
President Trump is expected to meet with Chinese President Xi Jinping at the upcoming G20 meeting in Osaka, Japan, later this month. Expectations are presently extremely low that a trade resolution can be reached at this leaders meeting, although it certainly remains a key near-term risk event for oil prices.
USD/CAD Daily Mountain Chart | Source: ActivTrader
The USD/CAD pair has been reacting to weakness in the greenback for most of this month, the realities of the ongoing bear market in oil prices have now triggered a much-need technical correction. Key upside resistance for the USD/CAD pair is found at the 1.3355 and 1.3388 levels, while major downside support is located at the 1.3260 and 1.3220 levels.
Written by Nathan Batchelor, External Analyst, ActivTrades
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