WTI tests key support
Updated
WTI was testing a key support area after falling for the third consecutive day. As can be seen on the chart, US oil was testing support around the upper end of the 80.00 - 81.50 support area, which had been resistance in the past. Here, we are expecting to see a rebound given the bullish price structure of crude oil over the past several days. If so, another test of the bearish trend line going back to September 2023 should not come as surprise, around the $84.00 area. The line in the sand is now at around $80.00, the most recent low prior to the latest rally. Should WTI break below this level, then it would invalidate its still-bullish technical picture. But my base case scenario is that we could see a recovery from around the current levels.
By Fawad Razaqzada, market analyst at FOREX.com
By Fawad Razaqzada, market analyst at FOREX.com
Note
We have just seen the latest crude oil stockpiles data from the US Department of Energy's Energy Information Administration (EIA):Crude -3.443MM, Exp. +1.0MM
Gasoline -2.006MM
Distillates +4.884MM
Cushing -702K
SPR +477K
Production 13.3MMb/d +100k
Crude oil had already bounced off its lows and when the latest US oil inventories data came out, prices didn't show any material reaction in immediate response. However, a couple of minutes afterwards when investors digested the data, prices broke above $81.50.
The muted initial response was partly because the American Petroleum Institute (API) had already estimated yesterday that there would be a bigger-than-expected drawdown in oil stocks.
In any event, the bullish trend remains intact and if we see a positive close today around the $80-81.50 support area, then this would bode well for the trend followers as we had into the business end of the week.
By Fawad Razaqzada, market analyst at FOREX.com
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