Crude oil price ticked up for the WTI variety has ticked up moderately on the day, as the crude oil inventories report by the Energy Information Administration (EIA) showed that 1.379 million barrels were added to US crude stockpiles. This figure was slightly short of the 1.54 million barrels predicted by analysts.
Consequently, WTI crude oil edged up slightly and is now trading at intraday highs of 56.31 as at the time of writing.
Fundamentally speaking, international trading rates of crude oil may still be capped as a result of the deluge of negative price fundamentals, chief of which is the demand drop off predicted by the International Energy Agency in its last monthly outlook.
Therefore, WTI crude oil may find itself restricted to the upper border of the near-term up channel in which it has been trading since September 2019. A break above the upper border of the up channel (i.e. the channel’s return line) sees WTI targeting the May 30 and September 19 highs of 59.60. This is also the 50% Fibonacci retracement from the swing high of October 3 2018 to December 12 2018. Further upside could open up an opportunity to target the 61.8% Fibonacci retracement at 63.55.
If price action keeps with the fundamentals that are currently at play, we would expect crude oil prices to be rejected at the 57.83 resistance line, which intersects the channel’s return line. This provides an opportunity for crude oil prices to target the 38.2% Fibonacci retracement line in its intersection point with the channel’s lower trendline. Further downside targets could be reached on the breakdown of this channel, with the 54.20 price level (neckline of May/June 2019 double bottom) being the first of these target areas, and the 23.6% Fibonacci retracement (double bottom troughs) at 50.50 also in the reckoning.More content