The Energy Information Administration (EIA) has reported an unexpected rise in crude oil inventories. Data shows that US crude oil stocks climbed by 5.7million barrels for the week ended July 3, 2020. This was much higher than the previous week’s drawdown of 7.2 million barrels, and also higher than the expected drawdown of 3.2 million barrels.
Crude oil price on the WTI benchmark did not react to the news, but this has served to further dampen sentiment on the black gold and places upside limitations on the ability of crude oil prices to rise above present levels.
Crude oil price has remained virtually stagnant following the downgrade by ENI of its price projections for the next 3 years. Demand has also failed to recover sufficiently, as a new wave of coronavirus surges across the world could force governments to lockdown their economies once more, which will stifle factory activity and demand for the product.
Technical Outlook for Crude Oil Price
Crude oil price on the WTI benchmark is encapsulated within the ascending triangle, with price action approaching the apex of the triangle. Resolution of this pattern could occur in a few days, given the proximity of the price action to the apex.
The technical expectation for this pattern is for price action to break to the upside. If this is fulfilled, WTI crude oil price could target the 44.00 mark following the breakout. Further advance to 49.60 would fulfil the measured move that corresponds to the price objective for this pattern.
On the flip side, a breakdown of the pattern from weak fundamentals could force a selloff that targets the 34.81 support, with 29.78 (12 March and 18 May lows) remaining relevant within this scenario. This decline would also invalidate the triangle pattern.
Crude Oil Price Chart (WTI; Daily)