Crude Falls with the Dollar
As the value of the U.S. dollar has been heading lower of late, Crude Oil prices have been going higher. But today, these two got together for a drop. The December Crude contract (CLZ7) closed the day at $91.41, while the December Dollar Index contract (DXZ7) is trading at 75.79. Although the Dollar is slightly above its all-time lows, it can still be considered to be in a decided downtrend.
In the news today, the Paris-based International Energy Association cut its estimate for fourth quarter global Oil demand by more than 500,000 barrels, inspiring bears to pull prices down to 90.13 at one point. Oil bottomed out at around 1:00 PM Central, at which point the bulls came in to give the market a slight pullback.
What is interesting about the chart today is that the low was right at the 25-day moving average, which turned out to be the spring for the late day pullback. Another level of support that should not be overlooked is October's $89 level. Below that, the next level of support is around $85 set a week earlier in October.
Tomorrow, Oil traders will be watching for Crude inventories, due out at 9:30 AM Central time. Other announcements include retail sales, PPI, and business inventories.
Mike Tosaw, Director of Education
