West Texas Intermediate (WTI) crude fell for the seventh consecutive day as geopolitical concerns fade from the headlines. The fall in future prices is the longest string of losses since December of 2009.
The risk premium due to the Iraqi conflict has collapsed. Although Islamic militants have captured several cities north of Baghdad, the vast majority of the violence has remained in the north and away from the oil assets located primarily in the south. Iraq is the second largest oil producer in the OPEC-nations, and a spread of conflict in the south would quickly support oil prices.
The increase in Libya’s production has put downward pressure on both WTI and Brent crude. The Libyan Oil Ministry said that there is 7.5 million barrels of crude ready for export from the Es Sider and Ras Lanuf terminals. Traders are worried that the US equity markets are beginning to top, and that fear is spreading to other risk assets.
Crude futures continue to breakdown after closing below $104.52 per barrel but is seeing minor demand at $103.40, which is a combination of price action support and dynamic support from the daily 72 EMA. However, the +/- DMI is signaling a bearish crossover, and price action is likely to continue its trip south with a close below current levels. Support is located at $102.16 and $101.235. Resistance is found at $104.63 and $105.48.