Following the bullish recovery for crude oil of the last two weeks, which saw the commodity recover from the lows of $86 per barrel to test the $95 per barrel region, the end to the month was disappointing with the June futures contract closing lower at $93.46 having opened at $94.42.
Indeed this bearish momentum has continued overnight on Globex with the commodity currently breaking through the $93 per barrel area to close at $92.73 at the time of writing. What was particularly worrying in yesterday’s trading session was the associated extreme volume which suggests in itself heavy selling pressure coupled with profit taking and end of month squaring.
The key price level is now that mentioned earlier in the $95 per barrel region which came into play earlier in the month, snuffing out the bullish recovery at that point, and which is now developing into a serious level of price congestion. Indeed this is self evident from the volume at price indicator on the left hand side of the chart which clearly shows the deep area of potential resistance now building at this price. For any further upwards momentum for oil we need to see this area broken. However, at present the technical picture looks weak and with today’s weekly round of oil stats which show a build of 1.2m barrels this could provide the catalyst for a further leg down.
By Anna Coulling