WTI oil price stabilizes above $56 handle which was reached after Tuesday’s nearly 5% fall, sparked by fresh selling after oil price lost traction and failed to clearly break psychological $60 barrier.
OPEC’s decision to extend production cut by March 2020 despite concerns that global economy slowdown can seriously dent demand for oil, remains supportive factor, with additional positive signal from fall in US crude inventories (API report on Tuesday showed draw of 5 mln bls vs 3 mln bls f/c). EIA crude stocks report is due later today (2.9 mln bls draw vs unexpectedly strong fall of 12.7 mln bls previous week) and could provide fresh signal. Daily techs remain bearishly aligned, as bullish momentum is weakening and Tuesday’s long red daily candle weighs. In addition, Tuesday’s close below $56.71 (Fibo 38.2% of $50.96/$60.27 rally) generated negative signal, which requires confirmation on break below pivotal $55.55/75 support zone (converging 20/30DMA’s / 50% retracement). On the other side, stronger recovery would face initial barrier at $57.91 (10DMA) which guards more significant 200DMA ($58.40), with clear break here needed to neutralize bears and shift focus towards key $60 resistance zone.
Res: 57.04, 57.66, 57.91, 58.40
Sup: 56.04, 55.75, 55.55, 54.52
