WTI oil holds within narrow consolidation on Wednesday after strong 3.5% rally previous day, which marked the biggest one-day gains since 22 June.
Rising fears about the impact of Hurricane Florence which is moving towards the US east coast, boosted oil prices, along with persisting concerns about supply shortage on US sanctions on Iran.
Release of API crude stocks report on Tuesday which showed 8.63 million barrels draw in oil stockpiles, much stronger than expected, added to strong bullish sentiment.
Release of EIA crude oil inventories report later today is in focus, with forecast for 1.3 million barrels fall in oil inventories vs previous week’s draw of 4.3 million barrels.
Another surprise on stronger fall in crude stocks could further inflate oil prices.
Tuesday’s strong rally retraced over 61.8% of $71.38/$66.85 bear-leg, probed above top of thin daily cloud ($69.85) and cracked psychological $70 barrier, showing scope for further advance.
Bullishly aligned daily techs are supportive, but flat momentum warns of extended consolidation.
Sustained break above $70 barrier would open way towards key barrier at $71.38 (04 Sep spike high), while cluster of converged daily MA’s (10/55/100) formed strong supports within $69.24/$68.84 zone, which is expected to protect the downside.
Res: 70.13, 70.48, 71.00, 71.38
Sup: 69.24, 68.84, 68.22, 68.00
