WTI oil price is trading within narrow consolidation on Wednesday, holding above Tuesday’s low at $42.94, the lowest since 14 Nov 2016.
Strong bearish acceleration in past two days has eventually taken out important support at $43.74 (05 May low) and generated fresh bearish signal.
Oil prices remain under strong pressure on concerns about increase in US oil production that adds on growing fears about global oversupply.
Bears are eyeing next target at $42.19 (14 Nov low) with psychological $40.00 support expected to come in focus on stronger bearish acceleration
Release of better that expected API crude stocks data on Tuesday (crude inventories fell by 2.7 million barrels vs forecasted 2.1 million barrels draw) did not show stronger impact on oil prices, as traders are focusing on today’s release of EIA weekly crude stocks report, due at 14:30 GMT. Oil inventories are forecasted for 1.2 million barrels draw, below last week’s draw of 1.7 million barrels, which may pressure oil prices further on release at/below forecast.
Firmly bearish technical studies are supportive for further weakness, as oversold conditions have so far been ignored, however, corrective action should be anticipated in coming sessions.
Falling 10SMA which tracks the downtrend since 30 May offers solid resistance at $44.80 (reinforced by daily Tenkan-sen) which is expected to ideally limit corrective rallies.
Res: 43.59, 44.07, 44.80, 45.03
Sup: 42.94, 42.72, 42.19, 41.09
