Oil prices plunge on oversupply signs, dollar weighs

CHINA FEATURE PACKAGE ENERGY OIL FIELDOil prices tumbled for a second straight session on Tuesday on signs of oversupply in the market, and as the dollar’s rebound weighed on commodities.

Despite wars in northern Iraq, Syria and Yemen, it seems that output from the Middle East is soaring as Saudi Arabia continues to boost its oil production to take away market share from U.S. producers.

The Kingdom raised its production output to 10.31 million barrels per day in April, compared to 10.29 million barrels in March.

Saudi crude oil exports climbed in March to the highest in nearly a decade, official data showed on Monday.

Crude oil has dropped 2.72 percent after the breach of minor support line and SMA20 level at 59.10, as depicted on the daily chart.

The price may gains some support as it approaches the 50-center line of the RSI 14 momentum indicator.

For today, the coming support ahead for crude oil is located at 56.95.

U.S. Crude Stockpiles

Later in the day, the American Petroleum Institute will release its weekly inventories report, while the EIA report due on Wednesday may show oil inventories slipped 1.4 million barrels in the week ended 15.

U.S. oil inventories dropped 2.2 million barrels in the week through May 8, following a 3.9 million barrels fall a week before, the EIA report released last week showed.

In spite of the consecutive drop in the U.S. buildup, the inventory remains near the highest level for this time of year in at least 80 years.

Baker Hughes will release its weekly U.S. rig count data for this week, after last week’s report signaled a decline for a 23rd straight week.

Crude oil futures for July delivery is currently trading around $58.55 a barrel, while Brent crude tumbled to a low of $64.64.

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Ahmed Mamdouh

Ahmed Mamdouh, Co-Founder and Head of English Fundamental Analysis at FXComment.com, with 7 years of experience in the financial markets. Mamdouh holds a Master’s Degree in Economics from The American University in Cairo and a Bachelor Degree in Economics from The Faculty of Economics and Political Science, Cairo University.

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