Crude oil futures for delivery in January 15 [CLF5.NYM], which is traded on the New York Mercantile Exchange, fell U.S. $2.41 per barrel to U.S. $57.54 per barrel, or -4.02%, after the International Energy Agency (IEA) cut its 2015 demand forecast again. 

The U.S. Producer Price Index (PPI), which measures the wholesale prices, came in at -0.2% month-on-month, below expectations of –0.1%, and did not help much to support the crude oil price. The headline November PPI inflation now printed at 1.4% year-on-year, well below the U.S. Federal Reserve inflation target of 2%+.

Earlier this week, China’s November PPI came in at -2.7% year-on-year, below expectations of –2.4%. The negative PPI has an impact on crude oil demand as China’s crude oil imports dropped U.S. $2.01 billion to U.S. $16.42 billion in November. Deflating oil prices could prompt importers to wait until the oil gets even cheaper and delay purchases.

Technically, the crude oil price just broke the 6-year support at U.S. $59.65 per barrel. The next technical support is U.S. $56.35 per barrel. It is possible that the crude oil prices could retest the 10-year support at U.S. $40.25 per barrel if global deflation persists or if oil producers keep on drilling. 

RBOB gasoline futures for delivery in January 15 [RBF5.NYM] is now traded at just U.S. $1.66 a gallon, ~ THB 13.95 a liter. Very cheap, isn’t it?! The problem is that a minimum order size is one contract of 42,000 gallons, or ~ 160,000 liters. 

The 61.8% Fibonacci retracement level is a big warning sign that a major trend change in the market is coming. As crude oil prices are now well below U.S. $77 per barrel, or the 61.8% Fibonacci retracement level, the only sign that crude oil prices may hit the bottom is when the price stops falling.