Houston, TX – (StockNewsDesk) – 12/06/2014 — Perhaps for the first time, employment numbers reported by U.S. policymakers surpassed expectations by such a huge margin. Following such robust information, gold prices fell nearly 2% but later recovered and settled around $1190 levels. However, these better than expected numbers failed to support crude oil prices. The largest crude oil producer, Saudi Arabia, continued to support its earlier stance on not reducing the oil supply. This created a negative impact on the crude oil prices. Better economic indicators show improvement in the economy, which means higher consumption of crude oil. This argument failed to pull up crude oil prices.
Crude oil prices predominantly reacted to the fact that Saudi Arabia will be easing its export prices of crude related products to the U.S. and Asia. Technically, the crude oil price has very strong support at $63.72 a barrel and has an upside resistance of $73.56 a barrel. Yesterday, the commodity traded in the range of $65.19 and $66.86 a barrel before settling at $66.81 a barrel.
Saudi Arabia and U.S. Shale Compete on Prices
Saudi Arabia’s state-run crude oil companies lowered the crude oil prices that they export to the U.S. and Asia. The crude oil prices have come down to their lowest level in 14 years. The largest producer of crude oil just stepped into direct competition with the U.S. shale companies that offer lower crude oil prices. While on the other hand, Saudi Arabia, along with the OPEC countries, maintained its stance on crude oil supply. With the supply of the crude oil remaining unchanged, and European and Asian economies cooling down, it seems highly unlikely that crude oil prices will move up anytime soon. Moreover, tensions going on in the Middle-East have also failed to shake up the crude oil prices.
The unemployment rate in the U.S. remained at 5.8%, however, the number of people getting employment increased significantly to 321,000. This was well above expectations of 225,000 and earlier expectations of 243,000. This impressed investors, hence, diverting investment away from the yellow metal, gold, and toward equities. This prompted the gold prices to fall below $1200 mark. This also suggested that crude oil consumption might increase with the improvement in the economy. Hence, investors expected upside movement in crude oil price but the low price offered by Saudi Arabia for export shrugged off the optimism.