Crude oil prices have remained stagnant over the last few days, as traders try to figure out what is next for crude oil prices. From a technical point of view, the best time to buy was on June 15, when the price on the July contract slid to £34.34 per barrel.
The June 15 low is now the short-term trend-defining level for prices, and as long as crude oil trades above this level we might see the June high of $40.43 tested over the next few days.
Traders that are not already long crude oil will probably wait for a corrective slide to the 61.8% correction level at $36.09, from this level, the risk-reward ratio favours the upside.
A break to the June 15 low will open the door for a slide to the May 29 low at $32.37, followed by the May 21 low at $30.73.
Crude oil production in the United States Reaches two-year low
Crude oil production has been dropping sharply over the last few weeks, and from March 2020, US crude oil production has dropped from 13 million barrels per day to 10.50 million barrels according to the EIA.
Still, despite the lower crude oil production, US crude oil stock piles reached a multi-year high of 539 million barrels. High imports from Saudi Arabia is cited as the reason, as many of the deals are prepared months ahead.
A reduction of the stock piles will be key for traders and investors going forward, as the rise in crude oil prices is suggesting we are returning to normality. But this view will be challenged if stock piles remain high.