Oil extends weakness through key supports as bearish pressure rises
WTI oil price declines for the third straight day and breaks below $56 handle after taking out series of strong technical supports.
Negative sentiment on concerns about global oil demand, in light of latest tough comments on trade conflict by President Trump was boosted by signals of much faster than expected recovery of Saudi oil installation, which were damaged in recent attack, with both crude stocks reports (API on Tuesday and EIA today) showing stronger than expected build in crude inventories.
Tuesday’s close below important Fibo support at $57.44 (61.8% of $53.93/$63.12) and today’s extension below a cluster of daily MA’s, were strong bearish signals for extension towards target at $53.93 (12 Sep low), however, close below MA’s (200 / 55/30) is needed to confirm scenario.
South-heading daily momentum is about to break into negative territory, but oversold stochastic suggests bears may consolidate before resuming trend from $63.12 peak.
Broken Fibo support at $57.44 and 10DMA at $57.67 should ideally cap extended upticks and keep bears intact.
Res: 56.62; 56.98; 57.44; 57.67
Sup: 56.10; 55.73; 55.56; 54.76