Crude oil prices edged lower on Tuesday following Monday’s breakout, and prices continued to drift lower in the after hours session. The smaller than expected draw in crude oil inventories and larger than expected build weighed on prices. Jobs data in the U.S. for September continued to show strength which buoyed the dollar and also weighed on crude prices.

Technicals

Crude oil is forming a bull flag pattern which is a pause that refreshes higher. Prices are drifting lower following Monday’s breakout. Support is seen near the 10-day moving average at 55.11, while resistance is seen near the May 2015 highs at 62.58. Momentum is positive as the MACD (moving average convergence divergence) histogram prints in the black with an upward sloping trajectory which points to higher prices. The RSI (relative strength index) dipped lower, but continues to show strength which reflects accelerating positive momentum. The only caveat is that the index is printing a reading of 76, above the overbought trigger level of 70 which could foreshadow a correction.

The American Petroleum Institute reported a draw of 1.562 million barrels in crude oil inventories, versus expectations that inventories would draw down by 2.7 million barrels for the week ending November 3. Gasoline inventories, according to the API, saw a small build of 520,000 barrels for the week ending November 3, against an expectation of a draw of 2.25 million barrels.

Jobs Data Remains Strong

U.S. JOLTS reported job openings rose 3k to 6,093k in September after August’s 50k drop to 6,090k. The rate was unchanged at 4.0%. Hiring’s declined 147k to 5,273k after falling 101k to 5,420k previously. The rate dipped to 3.6% from 3.7%. Quitters increased 89k to 3,182k after the 101k slide to 3,093k. The rate edged up to 2.2% from 2.1%. The data continue to show a tight labor market, with job openings not far from their record high of 6,140k from July.

Confidence Continued to Rise

U.S. IBD/TIPP consumer confidence index rose to 53.6 in November, the highest since March’s 55.3, from 50.3 in October amid general anxiety over the direction of the country, and as the disasters took their toll. All three categories improved in November. And this is the longest streak in positive territory in more than a decade. The 6-month economic outlook index bounced back to positive territory, rising 6.4% to 51.8 this month, and is well above the 32.1 print form December 2007 when the economy entered recession. The personal financial outlook index rose 3.5% to 61.6. The index measuring confidence in Federal economic policies posted the biggest gain, jumping 10.5% to 47.3, after more than recovering the 9.1% dive to 42.8. This month’s data largely reflected growing confidence in the labor market after the unemployment rate fell to 4.1% in October, a 17-year low. According to the report, “Americans have strong conviction in the current economy, and the majority believe the economy will improve further in the months ahead.” Additionally, “consumers are also encouraged by record highs in the stock market, as gains in the market have translated into rising retirement account balances. In addition, a number of President Trump’s economic policies, including the proposed tax reform plan, are viewed favorably by many Americans. Also, many see that the appointment of Jerome Powell as the new Federal Reserve Chairman is a safe choice to continue the economic growth.” In a separate poll, the Presidential Leadership Index rose 9% to a still low 39.8, from October’s 36.5%, and compared to its long-term average of 49.5.