WTI crude oil prices continue to trade under pressure into this
afternoon. Crude oil prices (
) have not been this low since early July as market participants
shy away from the growth commodity.
[caption id="attachment_74121" align="alignright" width="300"
caption="De-Kastri terminal, Khabarovsk Territory (Russia's Far
Price has remained under pressure for three straight sessions
now, breaking the most recent support level at $87.85 as traders
pushed price below $86.10, just below the Fibonacci 50%
retracement level on the current wave.
Crude oil began the session under pressure because of a Moody's
downgrade of five Spanish regions this morning.
Moody's cited a weak economic outlook and uncertainty regarding
Spain moving ahead with a potential European Central Bank (ECB)
Adding to the pressure, the Bank of Spain lowered its economic
outlook for the country, stating that it now sees Spain's economy
contracting by 0.4% for the third quarter.
Crude oil's price drop accelerated as U.S. markets opened
sharply lower on continuing weak U.S. earnings.
As risk-off sentiment saturates the market, investors are
seeking the safety of the U.S. dollar, sending it higher against
the other major currencies and sending dollar-denominated
commodities such as gold and crude oil lower.
Currently the U.S. dollar index is up by 0.31 to 80.045.
The next possible catalyst for crude oil is tomorrow. The U.S.
Department of Energy will releases its Crude Oil Inventories report
at 10:30 a.m. EDT. Analysts are forecasting a 2.0 million build
compared to last week's 2.9 million build.
: Although lower crude prices are good for business -- and
eventually for us at the gas pump, they're a negative indicator for
global growth. While lower prices will help business margins, they
also imply lower demand from firms because of continuing
anemic growth and global uncertainty. Crude oil could
very well be sending us a message.