Crude oil price on both the Brent and WTI benchmarks completely ignored the larger-than-expected spike in crude oil inventories. According to the Energy Information Administration, crude oil inventories recorded an additional 7.9 million barrels last week, as against the projections that there would be a shortfall of 2.5million barrels. This figure was also higher than the drawdown of 5 million barrels recorded the week before.
This unexpected spike in crude oil storage did nothing to stop the bullish action of the Brent crude benchmark on the day, as it hung on to the 2.98% gains it has registered on the day.
Brent crude oil price action of the last two days has formed a piercing pattern, abutting against the resistance level at 35.61. Price action in the previous week has continued to test this price level without breaking above it.
The piercing pattern has bullish implications, and if this can propel crude oil price above this price level in a definitive breakout pattern, we could see price attaining 38.56. However, breaching the elusive $40 mark requires the price to advance beyond 38.56, with 41.43 and 44.16 lending themselves as potential upside targets.
On the flip side, failure of the piercing pattern and rejection at 35.61 could allow sellers to re-enter the fold, aiming to force prices down to 31.69 and possibly 28.38. Further support lies at 24.68 and 22.35, where previous multi-year lows are located.