Bears re-take control after recovery fades and build in US inventories adds to negative tone
Recovery from new over three-month low at $52.14 (sparked by unexpected fall in crude stocks (API report) and Yemen’s Houthi rebels taking responsibility for attack on Saudi oil installations) stalled on Wednesday and oil price fell on persisting concerns on impact on demand over spreading coronavirus.
Additional pressure on oil prices came from much stronger than expected rise in US crude stocks (EIA report showed build of 3.5 mln bls vs expected rise of 0.48 mln bls).
Near-term sentiment remains negative (oil price fell almost 9% last week) and recovery stall signals that the downside remains vulnerable.
Strong bearish momentum on daily chart supports scenario, however, bears might be delayed for extended consolidation as RSI and stochastic are oversold.
Limited upside action is seen preceding fresh weakness (ideally to remain capped by broken Fibo 76.4% at $54.34), which guards pivotal barriers at$55.88 (daily Tenkan-sen) and $56.88 (daily cloud base).
Break through new low at $52.14 would open way towards key levels at $50.91/49 and psychological $50 support.
Res: 54.34; 55.00; 55.94; 56.05
Sup: 52.83; 52.68; 52.14; 51.40