Article by ForexTime

Crude oil prices finally found support on Friday, giving a lift to diesel prices.  The entire petroleum complex was buoyed after WTI tested and held support levels.  Strong production gains seen in the Bakken shale continue to put pressure on prices, which have declined 25% since early July.

It is clear now that most of the new oil is domestically produced. Total U.S. net imports of energy as a share of energy consumption fell to their lowest level in 29 years for the first six months of 2014, according to the Department of Energy. Total energy consumption in the first six months of 2014 was 3% above consumption during the first six months of 2013, but consumption growth was outpaced by increases in total energy production. These changes led to a 17% reduction in net imports compared with the first six months of 2013.

The increase in total energy production was almost entirely concentrated in petroleum and natural gas. Petroleum accounted for 52% of the 2014 year-to-date increase, natural gas for 27%, renewable energy for 9%, and nuclear electric power for 2%.

The benefit to consumers during the upcoming winter is that heating oil prices will likely be much lower.  The Energy Information Administration projects the retail price of heating oil to average $3.63 per gallon this winter heating season, which would be $0.25 a gallon lower than the average price during the winter of 2013–14.

Technically, WTI crude oil prices held support near an upward sloping trend line that connects the lows in August of 2011 to the lows in June of 2012 and comes in at $86 per barrel.  With the RSI printing in oversold territory at 27, this might be a pivot point for crude oil, which could see a rebound to resistance near $90.

Article by ForexTime

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