Oil Consolidating, Looks Lower as Capitulation Still on Horizon (USO) (OIL)
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The price of crude oil is stable in early trading on Thursday, with WTI hovering a few dollars north of recent lows at $77.56, currently at $80.40. Inventory data out yesterday showed a reduction in U.S. inventory of 133k barrels, though analysts had expected a slightly larger drop of 500k. Energy markets had a muted reaction to the most recent economic data in the U.S. which showed initial jobless claims were inline at 386K, while last week's reading was revised up to 393K. Q1 GDP was also reported inline at 1.9 percent.
Markets are also keying in on the summit in Europe, although expectations for a solution to the crisis there have been pared in recent days as Germany appears unwilling to bend on their opposition to euro-bonds.
Crude oil prices have fallen sharply from a high of $110 in February as economic conditions in southern Europe have deteriorated, threatening other economies around the world. Traders say oil's failure to post a significant rally off the lows could point to more selling pressure in the near term. As yet, there has not been a 'capitulation' event in crude oil and many long positions could still be hunkered down, waiting for a significant rebound which may be a long way off. For now, $77 to $75 is providing solid support.
United States Oil Fund LP ETF (NYSE: USO) is expected to open slightly higher at 30.30.
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Markets are also keying in on the summit in Europe, although expectations for a solution to the crisis there have been pared in recent days as Germany appears unwilling to bend on their opposition to euro-bonds.
Crude oil prices have fallen sharply from a high of $110 in February as economic conditions in southern Europe have deteriorated, threatening other economies around the world. Traders say oil's failure to post a significant rally off the lows could point to more selling pressure in the near term. As yet, there has not been a 'capitulation' event in crude oil and many long positions could still be hunkered down, waiting for a significant rebound which may be a long way off. For now, $77 to $75 is providing solid support.
United States Oil Fund LP ETF (NYSE: USO) is expected to open slightly higher at 30.30.
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