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Daily Oil Price Analysis 21 Jan 2010

Crude Oil Chart 21 Jan 2010

The bearish sentiment evident in the last two weeks for crude oil continued once again today with daily oil prices ending the trading session once again with a widespread down bar and, more importantly, breaching the 40 day moving average which has added to this negative picture.  With daily oil prices now pushing deeper into the recent price congestion which has, so far, failed to provide any support, the outlook  for crude oil remains bearish, particularly with the 40 day moving average now broken and with the 9 day average diving below the 14 day.  However, for the longer term we have some considerable way to go before reaching the 200 day average which remains well below at the $70 per barrel price point at present, and the next key price level is $75 per barrel which represents the floor of the recent sideways consolidation.  As outlined in yesterday’s oil market commentary should this price handle be breached we could even see a retest of the $70 per barrel price point with a consequent test of the 200 day moving average.

From a fundamental perspective today’s crude oil inventory confirmed oil stocks unexpectedly falling by 400k barrels against analysts’ average forecast for a rise of 2.4m barrels.  Stocks of distillates (which include heating oil and diesel) fell by 3.3m barrels against a forecast of a decline of a mere 100k barrel while gasoline added 3.9m barrels, more than twice the 1.7m gain forecast by analysts.  Meanwhile refining capacity fell 2.9% to 78.4 against a forecast of 0.4%.

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