WTI oil is consolidating under new high at $73.04 (the highest since Nov 2014) on Thursday, taking a breather after steep five-day rally fully retraced $72.89/$63.58 correction leg and signaled continuation of larger uptrend from $26.04 (Feb 2016 low).
Oil price advanced strongly in positive environment as output shortage from Libya and Venezuela, sanctions on Iran’s oil export and unexpected supply reduction from Canada were among key factors that boosted oil price.
In addition, lower than expected output increase from OPEC and non-OPEC key oil producers, further supported bulls along with upbeat US crude inventories, which showed over 9 million barrels draws last week (API and EIA reports) and heavily beating forecasts.
Oil maintains strong bullish momentum which could drive the price higher. Close above previous high at $72.89 is seen as initial requirement as Wednesday’s spike to new high at $73.04 was short-lived and failed to close above $72.89 pivot at initial attempt.
Sustained break above $72.89 would open $74.94 (04 Oct 2011 low) and could challenge next key barrier at $76.35 (Fibo 61.8% of $107.45/$26.04 2014/2016 fall in extension, break of which would expose psychological $80 barrier.
No firmer signs of corrective action for now despite overbought conditions on daily chart, but repeated failure to close above $72.89 could be initial signal of correction.
Solid supports at $70.00/$69.50 zone should keep the downside protected.
Res: 73.04, 74.94, 76.35, 78.64
Sup: 72.26, 71.72, 70.81, 70.00
