Crude prices were lower during the trading session today plunging by close to 3 percent during the early morning trading session after witnessing a massive rally in the overnight session which saw the commodity prices bounce back from lower levels which was seen as a huge positive by traders and investors on the street. Many believe the sell off in crude prices was on the back of the fact that traders and investors are closely watching the report from research firm Baker Hughes with its latest estimates of number of rigs drilling for oil in the US.
It is imperative to state that crude prices saw a massive move in the overnight session from the session lows on the back of the statement from the Federal Reserve Chairman woman Janet Yellen. The Federal Reserve decided against hiking rates and continued to maintain its zero interest rate policy which was seen as a huge negative for the dollar which tanked by close to 1 percent against most currencies around the globe. It is imperative to state that a weaker dollar is seen as a huge positive for dollar denominated commodities like crude and gold. The only cause for concern was the outlook about global economic growth which would impact the demand situation for crude in the near term.
When looking at the daily charts for crude, the commodity continues to find resistance near the $49.76 level and has formed short term support near the $43.40 levels. The momentum indicators for crude have given a sell signal on the back of the strong price volume action seen in today’s trading session which is a clear indication of the shift of momentum towards the sell side. It is imperative to state that crude currently trades below most important daily moving averages seen as negative.