Crude oil price on the Brent benchmark surged this Wednesday after the Energy Information Administration (EIA) reported a larger-than-expected drawdown in crude oil inventories. Data just released indicates that the crude oil stocks in the US fell by 5.9million barrels, which was a much larger inventory shortfall than the -2.4million predicted by the markets. It was also a larger drop than last week’s decline of 3.5million barrels.
Crude oil prices responded positively to the data, with the Brent crude benchmark rising 3.5% as of the time of writing to trade at $66.17.
Technical Outlook for Crude Oil Price (Brent)
The daily chart of the Brent crude oil price benchmark reveals that the daily candle’s surge further lifts the price action off the lower edge of the bearish flag. This action has put the resistance at 65.95 at risk, with the potential of advancing prices taking out this resistance and pushing towards the 66.81 resistance barrier. This also sends the price to the flag’s upper border. If the price ends up breaking above the upper border of the flag, this would invalidate the pattern and open the door for bulls to aim for 67.74 and potentially 70.01.
On the other hand, a rejection at the flag’s upper border allows the price action to aim for the lower flag border, with a view to a resolution of the bearish flag. This move would need to dissolve support pivots at 64.26 and 62.21. A breakdown of the latter also breaking below the flag and pursuing a measured move towards 56.47. Attainment of this price projection means that bears must also take out 60.07 and 57.47 along the way.