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Global Recovery Stalls — Crude Oil Makes New Bottom

August 24, 2010 at 17:22 by Andriy Moraru

Crude oil fell to its new minimum level since July 7 today as the traders reacted to the speculations about the stalling global economic recovery and sold the commodity after the US housing report showed a decline in the existing home sales to the lowest level in the index history.

The oil is quite sensitive to the pace of the global growth, and if new signals of the feared second wave of the recession loom on the horizon, speculators tend to sell their crude contracts as soon as possible. Being one of the most speculatively traded commodity is a nice advantage during the growing market but it’s a bane during the time when the annual rate of the home sales falls by more than 25 percent in one month in United States.

Today is the fifth straight bearish day for the oil. Since the end of the recent rally (August 4), the commodity had only two bullish daily trading sessions. The analysts forecast a growth of the crude oil inventories for the last week (the report will be released tomorrow). Under the increased supply’s pressure, the prices will probably continue going down.

Spot oil (Brent) is current trading at $72.75 per barrel as of 15:22 GMT. It closed at $73.65 yesterday and touched as low as $72.20 earlier today.

If you have any questions and comments on the commodities today, use the form below to reply.

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