Crude oil futures for July delivery on the New York Mercantile Exchange this week slipped to a fresh 8.5-month low of $81.07 a barrel. The bears remain in full technical and fundamental command and there are no early clues to suggest a market bottom is close at hand.
From the fundamental supply-and-demand perspective, focus late this week is on the Vienna, Austria meeting in, of the Organization of Petroleum Exporting Countries (OPEC). The oil cartel is debating its collective production ceiling amid slackened worldwide demand for oil due to flagging major economies of the world. OPEC's official daily production ceiling is 30 million barrels a day, but most believe the group is producing about 1.5 million barrels above that level. OPEC heavyweight Saudi Arabia is not keen on lowering the daily production quota and has even said it would like to see it increased. However, most other OPEC members would like to see the daily quota decreased as a measure to prop up the world price of oil. It's likely the meeting will end with no significant quota change or proclamations. There are reports that Saudi Arabia and Iran have already agreed to make no changes in the production quota.
The sluggish economies in the major oil-consuming nations -- the U.S., China and the European Union countries -- are creating the major bearish market fundamental for crude oil at present. For the past several weeks, a string of generally downbeat economic data have come from the aforementioned countries.
For the liquid energy markets' supply-and-demand picture to turn from bearish to bullish, the major economies of the world will have to perk up. But it does not appear likely that this will occur soon.
A market fundamental that could quickly jolt the crude oil market into a price rally would be major and unexpected geopolitical turbulence in the oil-rich Middle East. However, that region has been uncharacteristically quiet the past few months.
From a technical perspective, Nymex crude oil futures prices remain entrenched in a 3.5-month-old downtrend on the daily chart. The next downside technical objective for the empowered crude oil bears is producing a close in nearby futures prices below psychological support at $80.00 a barrel. A move below that key price level would open the door to a quick challenge of $75.00. It would take multiple daily closes in nearby crude oil prices above what is now psychological resistance at $90.00 per barrel to begin to suggest that a market bottom is in place.
