Crude oil price is down below $54 ahead of the Crude Oil Inventories data at 2.30pm. I identified a number of bearish fundamentals in my previous analysis of the WTI crude oil commodity asset.
One factor that constitutes a rising influence on crude oil price is the worries concerning global growth. Many authorities are predicting a drop in global growth. Lackluster manufacturing PMI numbers from China and yesterday’s shock drop in the US ISM Manufacturing PMI data have triggered risk-off selling in the European session.
Reduced global growth leads to reduced oil demand, which increases stockpiles and drops prices. This has led to the persistent fall in WTI crude oil price all week long, even though positive data from the API have limited the downside. The API data showed a fall in US crude stocks by 5.9 million barrels last week, versus the market prediction of a rise of 1.6 million barrels.
The weekly Crude Oil Inventories report scheduled for 1430 GMT today should provide some near-term price direction for crude oil price.
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Technical Play on WTI Crude Oil
After dropping to an intraday low of 53.60, prices ticked up marginally and are challenging the resistance now formed by the 23.6% Fibonacci retracement (swing high of April 23 to August 7) at 54.13.
If the pullback move is rejected at 54.13, this opens the door for a move to 52.28 (close of daily candles on February 10/11 as well as August 7/8) in the near-term.
An upward break of 54.13 challenges 57.73 once more (ascending trendline now acting in role reversal). Above this area, the August 27 high at the 50% Fibonacci level could become the new target.