Crude Oil Prices Due for a Rebound? Doji Spotted on Trend Line Support!
WTI crude oil price CFDs finished higher for the first time in seven days yesterday. It bottomed at $57.71 and peaked at $58.69. By the end of the New York session, it had settled at $58.09, 6 cents higher than where it opened. In fact, looking at the daily chart, yesterday’s candle can qualify as a doji. This candle is typically considered as a neutral indicator. However, as you would learn in our forex trading course, the candle forming at a critical support level (trend line support, 100 SMA, and 200 SMA) could indicate that the drop could be running out of steam.
Data from the American Petroleum Institute (API) yesterday showed that crude oil inventories had a build up for the week ending on January 10. According to its report, inventories had a surplus of 1.1 million barrels. This came as a surprise as analysts had predicted a fall of 474,000 barrels for the week. However, crude oil prices continued to trade higher despite the news.
It may have been brought about by Short-Term Energy report from the Energy Information Administration (EIA). The agency now sees US crude oil production to come in higher in 2020 by 9% at 13.30 million barrels per day with prices up 7.7% at $59.25 from its initial forecast. Meanwhile, its estimate for 2021 are up at 13.71 million barrels per day and prices are 7.1% higher at $64.83. The upgrade in oil prices may have helped the commodity regain its ground on the charts.
EIA Inventories Report Due Today
For today, the EIA will be releasing its own inventories report. Scheduled at 3:30 pm GMT, it is expected to show a surplus of 400,000 barrels. It is more popular than API’s data and lower-than-expected figures tend to have a bullish effect on crude oil prices.
Crude Oil Price Outlook
On the hourly chart, you will need to watch out for resistance at the short-term trend line at $58.37. A strong bullish close above the trend line resistance would mean that the next ceiling is at $59.22 where crude oil prices topped in January 13.
On the other hand, reversal candles at the trend line or even below the long-term rising trend line on the daily chart could mean that there are still sellers. The next support level is at $55.22 where the commodity hit lows in November.