Crude Oil Prices Slip Below $62.00 Ahead of Inventories Report

Crude oil prices retreated from the $62.00 psychological handle yesterday. WTI crude oil CFDs opened yesterday’s trading at $61.68 and rallied to new three-month highs at $62.34. However, during the New York session, the commodity traded lower and finished the day virtually unchanged at $61.67.

US Dollar Strength Dampened Oil?

Yesterday, a couple of economic reports were released from the US. The Chicago PMI report for December topped expectations at 48.9 versus the 28.2 consensus. Meanwhile, the New Home Sales report for November came in lower at 1.2% versus the 1.5% estimate. We did, however, see an upward revision to October’s reading from -1.7% to -1.3%. These reports were generally positive for the dollar, and they currency’s strength may have weighed on oil.

API Inventories Report Due Today

For today, the American Petroleum Institute (API) will release its weekly report on crude oil, gasoline, and distillate stocks left in storage. Last December 25, it reported a 7.9 million barrel-shortage in inventories. A negative reading will likely be bullish for crude oil prices as they could indicate that US demand for the commodity will soon pick-up.

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Crude Oil Price Outlook

On the hourly time frame, we can see that crude oil prices have some room to move lower and still maintain its uptrend. When you connect the commodity’s lows from December 6, December 11, December 23, and December 30, you can see that the rising trend line falls around $61.27. This price also seems to coincide with the 100 SMA and 200 SMA. Lastly, it’s also the 50% Fib level when you draw the Fibonacci retracement tool from the low of December 20 to yesterday’s high. If sellers push crude oil prices to the confluence of support at this price, watch out for reversal candles because they could mean that crude oil prices may soon re-test their 3-month highs at $62.34.

On the other hand, if support at $61.27 does not hold, crude oil prices could fall to their December 23 lows at $60.16.

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