WTI oil price spiked to $65.95 on Wednesday but was unable to hold gains and extend recovery rally from Tuesday’s new nearly two-month low at $64.21.
Initial probe below daily cloud base (which marks strong support at $64.64) failed as subsequent bounce, supported by draw in oil stocks (API report on Tuesday showed draw of 2.02 million barrels vs previous week’s build of 1 million barrels) lacked momentum for stronger recovery.
Overall picture remains bearish (daily MA’s in negative setup and south-heading momentum) and favors further downside on eventual break below daily cloud, for test of next pivot at $63.73 (Fibo 61.8% of $58.06/$72.89).
Meanwhile, oil price may hold in extended consolidation, signaled by oversold slow stochastic, before bears continue.
Falling 10SMA ($66.82) and daily cloud top ($66.93) are expected to cap extended upticks and keep bears in play.
Focus is turning towards US EIA weekly crude stocks report which could provide fresh signals.
US crude inventories are expected to fall by 1.82 million barrels, compared to 3.62 million barrels draw previous week, which may not be enough to offset negative impact on oil prices from rising US production and fears of easing OPEC’s deal about reducing production in order to tighten oil market.
Res: 65.95, 66.86, 66.93, 67.56
Sup: 65.17, 64.74, 64.21, 63.73
