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Oil prices hold support in the face of a strong Dollar

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Oil prices hold support in the face of a strong Dollar

Oil prices held support levels in the face of a strong dollar for most of the week.  Prices were under pressure during a spate of dollar strength in Thursday but recovered toward the end of the trading session, moving above the $107 per barrel level.  Demand continues to remain strong, while fears over mid-east tension are keeping the complex buoyed.

The recent strength exhibited by European nations is a boon for crude oil bulls.  In the middle of the week, Euro statistics reported that both German and French GDP’s grew more than the US in the second quarter.  The overall GDP number for the EU was positive for the first time in six quarter.  Demand for distillates outside the US is increasing domestic production to the highest levels seen in the past 5-years.

Demand in aggregate continues to be strong for products, which include gasoline, diesel and jet fuel. According to the energy information administration, total products demand over the last four-week period averaged about 19.6 million barrels per day, up by 1.3 percent from the same period last year. Over the last four weeks gasoline demand averaged over 9.1 million barrels per day, up by 2.6 percent from the same period last year. Distillate fuel demand averaged over 3.9 million barrels per day over the last four weeks, up by 8.1 percent from the same period last year. Jet fuel demand is 4.8 percent higher over the last four weeks compared to the same four-week period last year.

Crude oil prices are poised to test resistance near the 108.90 level.  A close above this area would lead to a test of $114.  Support is seen near the 10-day moving average near 107.20.  The MACD is poised to generate a buy signal as the spread crosses above the 9-day moving average of the spread.  The RSI is printing near 60 which is on the upper end of the neutral range.

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