Driving Season is here and glug goes USOil

USOil, Daily                  

The USOil contract fell earlier to $45.75 lows after topping at $46.38 in London. The move lower came as OPEC released its monthly report, which revealed a nearly 340k bpd increase in production versus April. The upped output reportedly came from Nigeria and Libya, both exempt from the agreed OPEC/NOPEC production cuts. From a technical standpoint, traders have noted a so-called “death cross” that has occurred, with the 50-day moving average crossing under the 200-day moving average, following last Wednesdays big build in inventories. This is generally seen as a bearish development.  Support resides at $45.00 and near term resistance at $46.65.  As we enter the summer months and the main US driving season, with not let up in US rig count build, pressure remains to the downside. The EIA Weekly inventories, as ever, will make interesting reading tomorrow.


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