WTI oil is consolidating above new marginally lower 7 ½ month low at $71.19, posted on Wednesday in extension of massive fall which extends into fifth straight week.
Fading concerns about stronger impact on global supply from sanctions on Iran and another rise in crude stocks (EIA report on Wednesday showed build of 5.78 million barrels vs forecasted rise of 2.43 million barrels) along with increase in global oil production (US, Russia, Saudi Arabia, Iraq) continue to weigh strongly on oil price and maintain strong bearish sentiment.
On the other side, signals that China is on track to keep its oil imports at record highs this year, provides support, which is so far insufficient to offset strong negative sentiment.
Strong recovery rejection on Wednesday which left daily Doji candle with long upper shadow, adds to negative outlook but at the same time signals indecision.
Oversold daily studies warn that bears are running out of steam and generate initial signals of correction.
Daily slow stochastic and RSI are turning north and reversal from oversold territory would provide support scenario.
Falling 10SMA ($63.99) and broken weekly cloud top ($64.66) mark pivotal barriers, break of which is needed to generate stronger bullish signal and put bears on hold.
Meanwhile, the price may hold in extended consolidation, with the downside to remain vulnerable, as bears keep psychological $60 support in focus.
Res: 62.40, 63.17, 63.99, 64.66
Sup: 61.62, 61.19, 60.80, 60.00
