FX.co ★ Global macro overview for 26/07/2016

Global macro analysis for 26/07/2016:

The oversupply concerns continue to weight on crude oil market. Despite the fact that the US crude inventories are continuing to point to declines week after week (-2,342K vs. -2,000K expected and -2,567K prior), the price of the crude oil can not rebound due to the oversupplied market. Moreover, the US rig count is increasing (462 vs. 447 expected), so the drilling activity in the US is in the uptrend as well. This situation is rising concerns, because higher production levels in the US increase the supply levels and might push the oil prices even lower.

Let's now take a look at the Crude Oil technical picture in the daily time frame. In late June, the US crude broke above the $50 level (51.60 high). But since then, it has dropped sharply, losing more than 12 percent in that time. Currently, it is trading close to the 38%Fibo at the level of 41.91 and this level seems to be the next target for bears. Please notice the area from 42.99 to 41.86 will act as a strong, important support, because any break out lower will push the prices towards next support at the level of 38.88.