US crude oil
On May 13, US crude oil prices fell 1% and settled at $61.04 per barrel, ~8% below the highest closing level for active US crude oil futures since October 31, 2018.
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Why oil is losing momentum
Despite a fall in US crude oil inventories for the week ended May 3, based on the EIA’s report released on May 8, US crude oil prices are trending lower. The US-China trade war, which has worsened with both sides raising tariffs against each other, is dragging down equity indexes like the S&P 500 Index (SPY). In the trailing week, the S&P 500 Index (SPY) fell 4.1%. Because of the fall in the equity market, sentiment has turned bearish for oil prices since oil is a growth-driven asset. However, the rally in oil prices has kept up this year on the basis of OPEC and non-OPEC members’ production cuts and stricter US sanctions against Iran and Venezuela.
On May 13, US crude oil prices were 3.8% below their 20-day moving average. US crude oil prices fell 0.2% below their 50-day moving average. Since January 15, US crude oil prices never breached below this key moving average. Prices below these short-term moving averages indicate short-term weakness for oil. On the downside, the 200-day moving average, at $60.77, is a crucial level to watch.
In the week ending May 3, US crude oil inventories were on par with their five-year average—the same as the previous week.
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