The World Bank issued its Commodity Markets Outlook last week and while the bank raised its 2015 oil price forecast, it said the price would not return to 2014 levels. The demand for crude oil was higher than expected in the second quarter. Despite the marginal increase in the price forecast for 2015, large inventories and rising output from OPEC members suggest prices will likely remain weak in the medium-term.
Oil prices dropped Friday as worries about a global crude glut continued to weigh on prices as US oil companies added more oil rigs this week despite the collapse in crude prices. Data showed a weekly rise of 21 in the number of active US oil drilling rigs to 659, according to oil services company Baker Hughes’ last week report. And the stronger US Dollar made the dollar-priced oil less attractive and more expensive to investors holding other currencies.
The US dollar climbed against most major currencies last week as investors were awaiting the closely watched Federal Reserve meeting this week, in hope of further rate-hike signals.
Since the beginning of the year oil prices fell more than 9.0% and broke below the consolidation zone that ranges from 54.42 up to 63.70. Last week crude oil fell for its fifth straight week and closed in the red, in near the low of the week. The commodity is still in a well establish bearish phase and the stochastic is showing an overbought market but even with the commodity well into overbought territory, we should not fight the strong upward trend just yet.
Expecting downward move to a year low at 43.56 on a break below previous week low at 47.72 (scenario 1).
LCrude is a CFD written over Light Crude futures.