Crude oil touched a recent new low last Friday at $39.55 levels last seen in February 2009, that was a drop of $2.65 in one day; it has since recovered most of that drop. Today’s price action has seen trading in a very narrow range from a high of $41.83 to a low of $41.41 for the London session. Tomorrow at 3:30pm will see data for crude oil stocks released by the Energy Information Agency; the forecast is for another reduction in stock of 1 million barrels after last week’s reduction of 1.682 million. A reduction would seem likely given the continued downward pressure on the price of crude oil. A sharp drop in the number released tomorrow may reverse the downward trend slightly; any number close to the 1 million mark should see the main trend continue. Crude oil’s price is under more pressure as Japan, number 3 world consumer of crude oil, released figures today for GDP that showed a contraction of the economy by 1.6% on a yearly basis. The continued slowdown in China and a US Dollar that continues strengthening are also factors that will keep pressure on the downside for crude oil price in the near future.
Looking at the Monthly chart there is a strong support level at $32.40, red horizontal line, which is the previous low to last Friday’s. This is an important level as the last time it was reached a major reversal took place, which tends to create psychological barriers when they are met again.