US Crude Inventories Reach 83-Year Highs; Crude Near-Term Outlook

by on April 24, 2014 6:54 am BST

Due to the large Shale boom in North America, the United States crude inventories reached levels not seen since the Great Depression, an 83-year high. According to data from the Energy Information Administration (EIA), crude inventories increased by 3.52 million barrels last week to 397.7 million barrels. Crude output increased by 59K barrels per day to 8.36 million, the most since 1988.

The advances in horizontal drilling and hydraulic fracturing, commonly known as fracking, has led to a shale renaissance, which has led the US to become more energy independent. The bulging supply, though, has sparked interests in repealing a three-decade old law that prevents most crude from being exported.

Crude futures traded higher after bouncing off of support at $101.16 per barrel, as price action remains above the 200 EMA on the 4H chart in light, early morning trade. Currently at $101.725, higher by .275 cent per barrel, crude could see some resistance at $102. This initial resistance level is confirmed by monthly price action and a Fibonacci fan from the current downtrend’s high to low.

Intermediate resistance will be found at $102.50 and $102.70. Support levels can be seen at the 200 EMA before retesting $101.16. Deeper support can be found at $101.29.

4H Chart of QM

4H Chart of QM