WTI oil consolidates above new 16-month low at $46.10, posted on Tuesday after daily fall of 7.5%, while oil prices were down 12.6% in past three days and down 40% in steep fall which commenced in early October. Renewed negative sentiment on fears that slowing global economy would depress demand and global oversupply, pushed oil price below psychological $50 level, after bears failed in initial attack in late November and subsequent recovery attempts quickly ran out of steam. Fresh bears were boosted by strong build in US crude stocks (API report on Tuesday showed build of 3.4 mln bls vs previous week’s draw of 10.1 mln bls). Focus turns towards today’s EIA report (2.4 mln bls draw f/c vs 1.2 mln bls draw previous week) which could add to negative sentiment if release disappoints. Profit-taking and oversold conditions are the main factors that paused bears, but upticks could be seen as positioning ahead of final push towards target at $45.46 (Fibo 61.8% of $26.04/$76.88 ascend) loss of which would open way towards June 2017 trough at $42.04 and unmask psychological $40 support. Former low at $49.40 and broken $50 pivot now mark solid resistances which are expected to cap, with falling 10SMA ($50.47) to limit extended upticks and keep bears intact. Alternative scenario requires break above 10SMA and nearby falling 20SMA ($51.17) to ease bear pressure, but break above 05 Dec recovery high at $54.54 is needed to sideline bears and signal stronger correction.
Res: 48.06; 49.40; 50.00; 50.47
Sup: 46.10; 45.46; 44.26; 42.04
