WTI oil maintains firm tone and holding above thickening daily cloud top on Wednesday, but the upside attempts were so far limited, following strong upside rejection at $70.40 on Tuesday. Oil prices were initially boosted by news that Saudi Arabia is comfortable with higher oil prices (Brent above $80), but bulls lost traction after release of API report late Tuesday showed unexpected build in crude stocks (1.25 million barrels vs 8.63 million barrels last week).
Subsequent pullback which left bullish daily candle with long upper shadow, signaled strong headwinds that oil prices are facing, despite positive signal from one of world’s top oil producers. Momentum is weakening on daily chart and keeping the downside vulnerable.
Release of US EIA crude stocks report today will be key event, with forecasts for draw in crude stocks of 2.74 million barrels against previous week’s 5.29 million barrels drop. Upside surprise on stronger than expected draw in oil inventories would offer fresh support to oil prices, which look for eventual close above daily cloud top (after repeated failure in past three days) to shift focus higher and expose barriers at $71.25/38.
Negative results from crude stocks report on build of oil inventories would weaken near-term structure further and risk deeper fall, which needs confirmation on close below a cluster of daily MA’s at $69.00/$68.80 zone.
Res: 69.93, 70.40, 71.17, 71.38
Sup: 69.34, 69.00, 68.80, 68.29
