The crude oil inventory report published by the U.S. Energy Information Administration for Wednesday July 10, 2019 has shown an unexpected drop in commercial inventories in the U.S for the week ended July 5, 2019. According to the report, commercial crude oil inventories in the United States dropped by 9.5 million barrels, which was more than the 2.9 million barrels shortfall that the market was expecting.
The price of WTI crude reacted positively as the news hit the markets, but price action has since retreated and is now in a choppy pattern as the market seeks for direction. Crude oil has gained close to $2 in the last 48 hours but may have got to a point where it is encountering some headwinds.
There is a horizontal resistance at $59.52, an area where price had hit resistance in May 2019. Below this level price is being supported by an ascending trendline which connects the price lows of the last two months.
If crude oil prices are able to break the $59.52 resistance with a 3% penetration (supported by an increase in buying volume), then buyers can enter on a break and pullback to $59.52, with stops placed at $58 and target placed at $63.47.
On the flip side, inability of price to break the $59.52 resistance will open the door for a test of the ascending support line at the $58.00 price level. A breakdown of price at this point will make a case for a short trade. Entry should allow for a break and pullback to $55.65, with stops placed anywhere between $58.10 and $59.50. Short trade should target to profit at $55.65.Don’t miss a beat! Follow us on Twitter.
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