Crude oil price on the Brent benchmark is trading nearly 8.5% higher on the day after a greater-than-expected crude oil inventories number. Markets had expected US Crude Oil Inventories to rise by 11.2 million barrels last week. Still, the crude oil inventories data showed that only 9 million barrels were added to the inventories in the previous week.
This piece of data provided a little respite for battered crude oil prices, allowing the Brent benchmark to rise above $22 per barrel. The West Texas Intermediate (WTI) was up 16.6% on the news, hitting $15.50 as at the last count.
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Technical Outlook for Crude Oil Price
The crude oil price on the UK benchmark has by today’s price move, started the process of breaking out of the falling wedge pattern on the daily chart, and continues the attempt to break above the 22.35 resistance (November 2002 lows in role reversal). We need to see a double successive candle penetration close above this price level to confirm both the break above the wedge and the 22.35 resistance. If buyers can successfully pull this off, then crude oil price could aim for the 24.68 upside target, formed by a prior cluster of lows of March 2020. The resistance at 31.69 completes the price projection from the wedge break. To attain this price objective, the barrier at 28.38 resistance has to give way.
On the flip side, sellers may be looking for areas where they can sell on the rally, and a failed break of the wedge or the 22.35 resistance may the starting point of such actions. If this is the case, then the downside target at the 2001/22 April low at 16.35 could be on the cards. If such rally selling occurs at higher areas, this will allow crude oil price to use the previously mentioned price levels as potential targets in role reversal.
As long as the demand for crude oil remains at historical lows and storage facilities remain full, crude oil price upside could remain limited. But as governments around the world start to ease lockdowns, it remains to be seen whether this will enhance the factory activity needed to boost demand.
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