Technical Sell Off In Crude After Rally

Oil prices corrected on Tuesday driven by technicals after rising more than 7% over three days. Crude had been supported by the prospect of Fed rate cuts and a political dispute in Libya shutting down oil production. The greenback fell on lower Treasury yields (USD BBDXY -0.1%).

• WTI fell 2.1% to $75.76/bbl after the low of $75.40. It has started today slightly higher at $75.82. The benchmark found resistance at the 50-day simple moving average on Monday but it has struggled to hold breaks above the 200-day ma. The bear trigger is at $70.88.
• Brent is down 1.9% to $79.85/bbl off the low of $79.47. It remained above initial and key support at $79.24 and $75.05 respectively. Key resistance is at $82.40.
• Bloomberg reported a 3.4mn barrel US crude drawdown last week with gasoline down 1.86mn and distillate -1.41mn. The official EIA data is published later today.
• Libya’s eastern government halted activity at all its oil facilities by implementing “force majeure” in its contracts to allow it to miss shipments in a dispute over control of the central bank who manages the country’s oil revenues. The reduction in Libyan output may make it easier for OPEC to implement its plan to reduce output cuts from October.