The intraday rally of WTI crude oil has been halted by the greater-than expected increase in crude oil inventories. The Energy Information Administration (EIA) reported that crude oil inventories rose by 1.6m barrels, which was greater than the drop of 500,000 barrels that analysts had predicted. It was also greater than the previous week’s numbers that showed an addition of 1.4million barrels.
As a result, crude oil price for the West Texas Intermediate (WTI) variety is now down to 57.97 as at the time of writing, after touching off intraday highs of 58.60.
Crude oil price has been unable to get significant traction above 58.60 for the past four days, as weak fundamentals continue to plague the asset and limit any significant upside movements. WTI crude oil continues to trade within the confines of the up channel, with the upper channel border (i.e. the channel’s return line) continuing to constitute a major resistance.
A rejection of price at the present levels could lead to a retest of the channel’s trendline. A decisive close of this trendline by a 3% penetration on the daily chart would confirm the breakdown of the channel and open the door for WTI crude oil to push lower towards the next support target at 54.20. This price level was the neckline of the double bottom troughs seen on June 6 and 13. Further downside below this neckline targets the double bottom price level at 50.85, with a minor pitstop around the 52.10 price level.
However, if WTI crude oil is able to start seeing improving fundamentals or significant risk sentiment plays from the US-China trade front, then the asset may push above the channel and aim for 60.59; previous highs of July 12-15.More content