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Oil prices rebounded on Friday after experiencing a volatile week

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Oil prices rebounded on Friday after experiencing a volatile week

For most of the week crude oil prices were under pressure despite solid demand reflected by the latest estimate of inventories from the Department of Energy. Strong demand for products such as gasoline and diesel fuel has been offset by record setting supply from shale oil produced in the United States.

According to the Department of Energy, US crude oil production increased to an average of 7.5 million barrels per day in July 2013, the highest monthly level of production since 1991. The Energy Information Administration forecasts US total crude oil production will average 7.4 million barrels per day in 2013 and 8.2 million barrels per day in 2014, both about 0.1 million barrels per day higher than forecast by the EIA a month earlier.

This week’s mild selloff comes on the heels of rising prices throughout most of July. Crude oil prices climbed during July 2013 as world oil markets tightened in the face of seasonal increases in world consumption, unexpected supply disruptions, and heightened uncertainty over the security of supply with the renewed unrest in Egypt.  Increasing demand for products, such as gasoline and diesel have been offset by solid production.

Crude oil moved higher toward 105 per barrels, testing resistance near the 10-day moving average at $105.20.  A close above this level would lead to a test of target resistance near 108.90.  Support on the crude oil is seen near the recent lows at 102.70.  Momentum on crude oil prices is negative, with the MACD (moving average convergence divergence) index printing in negative territory with a negative trajectory of the index.  The relative strength index (RSI) reflects consolidation as it is printing near 53, which is in the middle of the neutral range.

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