Today, crude oil futures fell back below the $79 level that has been a decent support level and resistance going back to April (see red numbered circles on the chart below). The fall below the level took the price down to a intraday low of $77.62 before bouncing back to the upside and settling just below the $79.00 level.
Recall, that the price this month moved higher at the start of the month, and in the process, moved to - and through - a ceiling area between $82.43 and $83.44 (see yellow area and green numbered circles). The high price reached $84.89 on August 10, but could not sustain momentum and fell back below that key swing area.
Last week, the selling stalled on 3 consecutive days near the $79 level (see red numbered circles). This week after rising to a high price on Monday at $81.75, buyers turn back to sellers. Today, the price cracked the $79.00 level.
Weaker PMI data in Europe and the US, and concerns about China's growth are helping to push the price lower on anticipation of weaker demand. More positive on fundamental news is that crude stocks today fell -6.135 million barrels in the current week which was greater than the -2.85 million drawdown expected expected. Gasoline inventories, however, showed a surprise build of 1.467 million versus -0.888 million drawdown expected.
Going forward, the $79 level remains a short-term barometer. Stay below is more bearish with the $77.30 level as the next target. Below that the 200-hour moving average at $76.46 and the 100-hour moving average at $75.42 would be downside targets.
