Analysts were
expecting an increase of 3.3 million barrels of oil this week, but according to
the Energy Information Administration release at 9:30 central time:
U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 10.9 million barrels from the previous week. At 482.4 million barrels, U.S. crude oil inventories are at the highest level for this time of year in at least the last 80 years.
As
a result of this supply side surprise, the price of crude oil quickly
fell by one dollar a barrel to $52.88, a drop of 4%. Since then, the
price has continued a bit lower.
Oil
had rallied the first two days of this week from $50 to $55, a gain of
10%. The price remains above the 50-day moving average price of $49.07
for several days now. This is the first time the price has held above
the 50-day moving average since oil prices began falling last summer.
Stan
Weinstein, a market technician I remember from the early 1980s when I
was working in Beverly Hills, would probably caution against buying oil
until the price crosses above the 30-week moving average. This could take awhile
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