WTI off lows after earlier drop, but what now?
Crude oil prices gave up their earlier gains, to turn modestly lower on the day after the release of the EIA weekly US oil inventories, before bouncing off their lows ahead of the FOMC rate decision. Watch the closing prices. A daily close in the red may lead to some follow-up selling in the days ahead, given that WTI has arrived and reacted negatively from the key $79 level.
Crude stocks came in at +3730K vs. -1025K expected and +1233K the week before. For gasoline, stocks came in at +2566K, significantly surpassing the expected +0.891K reading. Distillates, on the other hand, registered +881K against an anticipated +2147K. Refinery utilization saw a decrease of 0.4%, slightly more than the expected decline of 0.3%. Additionally, US crude imports reached their highest level since 2018, which may help explain the discrepancy in expectations.
Crude oil had staged a sharp recovery after hitting key support at $72.50 on Wednesday, before today’s struggles. The rally has been driven by hopes for increased fuel demand as the US driving season progresses. We have had a couple of stronger US macroeconomic pointers including the ISM services PMI and monthly jobs report that helped to reduce fears about demand weakness. Prices also found support from oversold conditions following a three-week decline that had been fuelled by concerns over Chinese demand and rising non-OPEC supply.
Today’s inventories figures were considered bearish by traders, and they sold oil after WTI had risen to test resistance and its bearish trend line around $79.
The lower highs suggest the short-term path of least resistance is still downward, until told otherwise by the charts.
In terms of support, the next important zone is between $76.00 and $76.50 for WTI, which had been both support and resistance in the past. If prices fall below this area, the bearish trend may resume, potentially triggering further technical selling.
Meanwhile the key resistance level to watch is around $79.00, give or take, where the trend line and the base of last week’s breakdown meet. This is where today’s rally has stalled for now. The bulls will need to see a close above here in order to initiate a move towards $80 and higher.
Written by Fawad Razaqzada, market analyst at FOREX.com
Follow me on twitter: https://x.com/Trader_F_R
Crude stocks came in at +3730K vs. -1025K expected and +1233K the week before. For gasoline, stocks came in at +2566K, significantly surpassing the expected +0.891K reading. Distillates, on the other hand, registered +881K against an anticipated +2147K. Refinery utilization saw a decrease of 0.4%, slightly more than the expected decline of 0.3%. Additionally, US crude imports reached their highest level since 2018, which may help explain the discrepancy in expectations.
Crude oil had staged a sharp recovery after hitting key support at $72.50 on Wednesday, before today’s struggles. The rally has been driven by hopes for increased fuel demand as the US driving season progresses. We have had a couple of stronger US macroeconomic pointers including the ISM services PMI and monthly jobs report that helped to reduce fears about demand weakness. Prices also found support from oversold conditions following a three-week decline that had been fuelled by concerns over Chinese demand and rising non-OPEC supply.
Today’s inventories figures were considered bearish by traders, and they sold oil after WTI had risen to test resistance and its bearish trend line around $79.
The lower highs suggest the short-term path of least resistance is still downward, until told otherwise by the charts.
In terms of support, the next important zone is between $76.00 and $76.50 for WTI, which had been both support and resistance in the past. If prices fall below this area, the bearish trend may resume, potentially triggering further technical selling.
Meanwhile the key resistance level to watch is around $79.00, give or take, where the trend line and the base of last week’s breakdown meet. This is where today’s rally has stalled for now. The bulls will need to see a close above here in order to initiate a move towards $80 and higher.
Written by Fawad Razaqzada, market analyst at FOREX.com
Follow me on twitter: https://x.com/Trader_F_R
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