Crude oil prices inched higher this Wednesday as the US Crude Oil Inventories recorded a drop in stockpiles. According to data released by the EIA, crude oil inventories fell by 1.1million barrels, which was a bigger drop than the previous week’s figure that showed an increase by 800,000 barrels. Even though today’s number was smaller than the drop in crude oil stocks that analysts had expected, it was still good enough to send WTI crude oil to near 3-month highs of 60.87.
The markets responded positively to the news as it searches for positive price triggers in a year which has seen crude oil prices under pressure from lower global demand forecasts. It is also coming on the heels of a recent OPEC meeting where members agreed to extend production cuts well into 2020.
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Technical Outlook for WTI Crude Oil
We have had two successive candle closes above the channel’s return line, which confirms the breakout of the price from the channel. However, this breakout is being challenged almost immediately by the resistance line at 60.75, formed by previous highs of July 14 as well as a cluster of lows from May 4 to May 14 (which will act in role reversal).
A successful break of 60.75 has to be shown by two successive daily candle closes above this price level. If this occurs, then the door is open for price to push towards 62.03 (April 6 low and May 7-10 highs). Further upside could bring 63.47 and 64.71 into focus.
On the flip side, if 60.75 is able to hold firm as a resistance area, we could see a retest of the recently broken channel return line in a pullback move. If the channel’s return line is unable to resist the pullback, price could re-enter the channel and retest previous resistance areas (now acting as support in role reversal) at 59.27 or 58.51.