Crude slide continues

30 Jul

Any bullish hopes that crude oil was ready for a rebound, following a month’s-worth of near relentless downside pressure, evaporated yesterday. Front-month WTI slumped below a level of intermediate support around $76 and is getting ever closer to the multi-month lows hit in early June. The daily MACD is pushing deeper into negative territory, indicating that momentum continues to point downwards. Despite this, oil is far from being ‘oversold’. Yet the MACD is approaching levels last seen at the beginning of June, just before prices took off to the upside and went on to rally over 13% in four weeks. Could history be about to repeat, or rhyme? So far, rising geopolitical tensions have failed to put a spark under prices. The last two years have shown that it’s actions playing out between Ukraine and Russia that move oil prices, not those in Gaza, Lebanon, Yemen and Israel. That dynamic could change of course. For now, concerns over the pace of economic growth, particularly in China and the US, have dampened prices. It’s just a question of where the sellers run out of puff.