Oil Crashes to Yearly Lows on Supply Woes
By: Eddy Peng May 5, 2017
Chart 1: WTICOUSD Daily
“While (OPEC) is expected to extend a self-imposed production cap by another six months, it will be a challenge to convince several non-OPEC members to follow suit,” said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics. U.S. crude output is now at the highest level since August 2015 as shale drilling is intensified. In response, the Organization of Petroleum Exporting Countries probably extend the 1.2 million barrel-a-day cut agreed to in November for six months, according to Nigerian Oil Minister Emmanuel Ibe Kachikwu. The cartel will hold a meeting and make a decision on May 25 in Vienna. While Russian government official was saying that it intends to support prolonging the curbs. U.S dollar index rallies today and is standing around 200-day moving average recently acted as a support, and likely to rebound on the signs that the U.S. House of Representatives on Thursday narrowly approved a bill to repeal Obamacare, bringing President Donald Trump a victory after he suffered a stunning defeat in late March that the failure of scraping Obamacare. With Thursday’s 217-213 vote in the House, the legislation will be sent to the Senate for consideration. Despite the successful pass, no Democratic House members voted for the bill. They said it would make insurance unaffordable for those in need most and leave millions uninsured. They also accuse Republicans of seeking tax cut for the rich, partly paid for by cutting health benefits. The significant drop is mainly driven by macroeconomic issues rather than technical ones. By analysing with Fibonacci retracement, after breaking to retracement line at 61.8, it is more likely to move towards next retracement at 100 near term.
Chart 2: WTICOUSD Daily – Fibonacci retracement
