WTI oil eased from new 2 ½ month high at $72.79 on comment from US President about high oil prices and unexpected build in US crude stocks.
Bulls faced strong headwinds after Trump’s message, with API report on Tuesday showing crude stocks unexpected climb (2.90 million barrels vs previous week’s build of 1.25 million barrels).
Technical studies are firmly bullish on daily chart and see current action as consolidation before bulls continue.
Bulls are taking a breather at $72.77 Fibo barrier (76.4% of $75.34/$64.43 descend, break of which would open way for extension towards $74.67 (10 July high) and key barrier at $75.34 (04 July high), the highest since Nov 2014.
Strong bullish sentiment was soured by recent comments but remains in play and supportive for further advance.
Release of EIA crude stocks report will be closely watched for fresh signals. Today’s expectations are for 1.27 million barrels draw (vs last week’s 2.05 million barrels draw), which should maintain positive sentiment if release comes in line with forecast.
Stronger than expected draw in oil inventories would boost oil prices for further advance, while deeper pullback could be expected if crude inventories fall below expectations or show build.
Such scenario would risk retest of broken Fibo 61.8% barrier at $71.17, with stronger bearish acceleration expected to test next pivotal support at $70.42 (30 July former high) reinforced by rising 10SMA.
Res: 72.36, 72.77, 73.64, 74.00
Sup: 71.82, 71.17, 70.42, 70.00
