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Crude Oil Price Analysis for March 9, 2018

David Becker

Crude oil prices continued to move lower on Thursday, dropping 1.3%, on the heels of Wednesday larger than expected build in crude oil inventories.  A stronger dollar, weighed on crude oil price following the monetary policy announcement on Thursday from the European Central Bank. The U.S. is poised to increase output of crude oil and products by 4-million barrels a day and Energy Secretary Perry believe that the U.S. should boost energy exports.

Technicals

Crude oil prices dropped more than 1.3% on Thursday falling to support near an upward sloping trend line that connects the lows in August to the lows in February and comes in near 60.0 per barrel. Resistance on crude oil is seen near the 10-day moving average at 62.09. Momentum has been whipsawing and has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses below the MACD signal line (9-day moving average of the MACD line). The relative strength index (RSI) broke down through support level which reflects accelerating negative momentum pointing to lower prices.

Energy Secretary Rick Perry Say Exports Should Increase

The US should make the best use of its oil and gas wealth by boosting exports and sharing production technology according to Energy Secretary Rick Perry. Perry referred to the drive to increase oil and gas exports and to increase investments in the oil and gas industry as “new energy realism,” adding that “It is by embracing this new energy realism that we will all move towards greater energy security and a brighter, more prosperous future. Let all nations embrace it, and the spirit of imagination and innovation that drives it, for their own sake and for the sake of the world.”

The Energy Secretary noted what the Trump administration has already done for the energy industry, including tax cuts and rolled back drilling and emission reporting regulations and said that the beneficial effect of a booming energy industry on the U.S. economy could be replicated elsewhere, using the technology developed there that unlocked the extensive hydrocarbon potential of the shale patch.

The Stronger Dollar Weighed on Crude Oil

The dollar moved higher after the ECB left official rates unchanged at Thursday council meeting and also confirmed the current QE schedule of EUR 30 billion per month that runs until the end of September. Going forward the ECB no longer says that QE can be extended in size and/or duration, but merely states that the current schedule can be extended “if necessary” and will run “in any case until the governing Council sees a sustained adjustment in the path of inflation consistent with the inflation aim”. Reinvestments will continue “for an extended period after the end of its net asset purchase program”. Rates will also “remain at their present levels for an extended period, and well past the horizon of the net asset purchases”.

Canada’s new housing price index was flat in January

Canada’s new housing price index was flat in January after a lack of change in December. The flat reading in December was the first month that the index failed to expand since the matching flat reading in April of 2015. The index slowed to a 3.3% year over year rate of increase in January from 3.4% in December. The annual growth rate peaked at +3.9% year over year in April and June of last year. Housing data was strong at the end of 2017 but has been mixed to softer so far this year, as demand was likely pulled-ahead by new mortgage rules, other regional policy measures and provincial guidelines.

Canada building permit values grew in January

Canada building permit values grew 5.6% in January following a revised 2.5.% gain in December. Permits for multiple residential units surged 14.2%, diving the gain in national permits during January. Single residential permit values dipped 1.3% in January. By region, a 71.0% surge in multi-family dwellings in Ontario after the 39.7% drop in December was a stand-out.

This article was originally posted on FX Empire

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