Ship Channel Shutdown Boosts Petroleum Inventories
Crude oil prices edged higher on Wednesday as concerns about Ukraine and Libya are overshadowing an industry report that showed a big jump in U.S. crude supplies. The Ukraine government on Wednesday warned pro-Russian activists who took over state buildings in eastern Ukrainian cities to enter talks or face the use of force.
Geopolitical events are outweighing a stronger than expected build in crude supplies report by the API on Tuesday evening. According to the American Petroleum Institute crude inventories jumped 7.1 million barrels for the week ended April 4, 2014. Analysts surveyed had forecast a climb of 2.5 million barrels. Analysts are pointing to the temporary closure of the Houston Ship Channel late last month. The API also reported gasoline stockpiles fell nearly 3.7 million barrels, while distillate supplies rose by 293,000 barrels. Analysts were looking for gasoline stockpiles to fall 1.3 million barrels and distillate supplies to decline by 800,000 barrels.
Crude oil prices moved higher testing the 102.50 level and poised to explore resistance near 105. Support on crude oil is seen near the 10-day moving average near 101.70. With the 5-day moving average crossing above the 20-day moving average a short term trend is considered in place.
Momentum on crude oil prices is moving higher with the MACD (moving average convergence divergence) index generating a buy signal. This occurs when the spread (the 12-day moving average minus the 26-day moving average) crosses above the 9-day moving average of the spread. The index moved from negative to positive territory confirming the buy signal.
The RSI (relative strength index) which is a momentum oscillator that measures overbought and oversold levels moved higher with price action, reflecting accelerating momentum, while printing near 60, which is on the upper end of the neutral range.
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