WTI Crude Oil Slips Below $38.00 Despite Libya Conflict; US Crude Oil Inventories Ahead

WTI crude oil price finished yesterday’s trading unchanged around $37.95 despite a conflict in Libya weighing down on oil supplies. As of this writing, the commodity is trading slightly lower at $37.98 from its opening price of $38.38. Can it resume its rally with the US crude oil inventories due later today?

Yesterday, Libya’s National Oil Corporation had to halt production as armed personnel entered the oil field in El Sharara. It is the largest one in the country and continued armed conflict could weigh on Libya’s capacity to produce oil. In the past, this type of news had a bullish effect on crude oil price simply because it weighed down on supply.

A possible explanation on why the commodity did not rally is because the US crude oil inventories report is due to be released later today. Due at 3:30 pm GMT, it is expected to show a drop of 1.8 million barrels for last week. A negative reading is often seen as a positive for crude oil price because it suggests that demand would soon pick up because of the drop in inventory. On the other hand, a higher-than-expected reading could be bearish for crude oil price.

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WTI Crude Oil Price Outlook

On the 1-hour time frame, it can be seen that WTI crude oil price CFDs have recently slid below support at the rising trendline (from connecting the lows of May 28, May 29, and June 8). Yesterday, the commodity even tested the trendline for resistance. When you enroll in our free forex trading course, you will learn that it is not unusual for markets to break a support level only to retest it in the future as resistance. A close below the 100 SMA at $37.20 could confirm that sellers are dominating trading. This could then mean that WTI crude oil price may soon fall to near-term support at $35.67 where it bottomed on June 4.

On the other hand, it’s worth pointing out that a bullish close around yesterday’s highs at $38.69 would complete the inverse head and shoulders pattern. A strong close above the neckline resistance around $38.75 could then signal a potential rally to WTI crude oil price’s 3-month highs at $39.98.

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