New efforts to revive growth from central banks in Europe, Japan and the U.S. have not been enough to overcome pessimism about the global economy's prospects. When economic growth slows, so does demand for fuel which typically results in lower oil prices. A reduction in energy costs can help boost economic growth further down the track.
In another sign of pessimistic economic expectations, Germany's Ifo index of business confidence fell for the fifth month in a row.
In other Nymex energy futures trading, heating oil declined 2.2 cents to $3.0957 a gallon and natural gas fell 3.1 cent to $2.854 per 1,000 cubic feet. Wholesale gasoline was down 2.95 cents to $2.79 a gallon
Crude Oil fell to 88.95 last week before recovering. Some consolidations could be seen this week, but another fall is mildly in favor as long as 94.08 holds. The recent fall from 100.42 extends to 61.8% the Fibo retracement of 77.28 to 100.42 at 86.12 and possibly lower. I expect strong support ahead of 77.28 to contain any Southside action. But, a clear break of 94.08 will turn my bias to the Northside for a test of the resistance at 100.42. I do expect another rise to 100.55 after completing the current consolidative price action.
The Big Picture: this current actions uggests that prices from 114.83 are a triangle consolidation pattern. The fall from 100.42 is likely the 5th and the last leg of the consolidation. That being the case any Southside action should be contained above 77.28 and bring on an upside breakout eventually. A clear break of 110.55 will suggest that whole rebound from 33.29 has resumed for a move above 114.83.
The Long Term Picture: Crude Oil is in a long term consolidation pattern from the high of 147.27, with the 1st wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it is the 2nd wave of the pattern. Crude Oil could make another high above 114.83, but I see strong resistance ahead of 147.24 to bring reversal for the 3rd leg of the consolidation pattern. Stay tuned…
The price of oil fell below $92 a barrel on Monday, dragged down by concerns about weakening global growth and demand for crude.
By early afternoon in Europe, benchmark crude was down $1.28 at $91.61 in electronic trading on the New York Mercantile Exchange. The contract rose 47 cents on Friday to close at $92.89 in New York.
In London, Brent crude was down $1.40 to $110.02 on the ICE Futures exchange.
New efforts to revive growth from central banks in Europe, Japan and the U.S. have not been enough to overcome pessimism about the global economy's prospects. When economic growth slows, so does demand for fuel which typically results in lower oil prices. A reduction in energy costs can help boost economic growth further down the track.
"Renewed concerns about a slowdown in the global oil demand weighed on market sentiment and prompted investors to some profit taking," said a report from Sucden Financial in London. "In addition, the strengthening U.S. dollar added further pressure to the oil market, while weaker global equity markets set the bearish tone on today's trading."
A stronger dollar makes crude for expensive and a less attractive investment for traders using other currencies. On Monday, the euro was down to $1.2920 from $1.2974 on Friday.
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