Oil prices rose further on bigger than expected inventory draw
WTI oil rose further and hit new highest level ($53.90) since mid-February in late Asian trading on Wednesday.
Positive sentiment persists despite the latest developments in the US and Europe where lockdowns were imposed on rising new infections and death toll, as well as the biggest coronavirus spike in China in months, as traders anticipate success of coronavirus vaccines.
Additional support to oil prices was provided by bigger than expected drop in oil inventories (API report on late Tuesday showed draw of 5.8 mln bls vs expected drop of 2.7 mln bls).
Tuesday’s close above $51.68 pivot (Fibo 76.4% of $62.63/$6.52) generated bullish signal, with today’s probe through pivotal 200WMA barrier ($53.21), adding to positive tone.
Close above the latter would confirm bullish stance and open way towards $54.62 (20 Feb lower top of descend from $65.63).
Daily moving averages are in bullish setup and positive momentum continues to rise, supporting the advance, also attracted by the twist of monthly Ichimoku cloud ($59.54), but overbought RSI and stochastic warn that bulls may take a breather and consolidate before resuming.
Dips are expected to provide better levels to re-enter bullish market, with solid supports at $51.68 (broken Fibo 76.4%), $50.66 (rising 10DMA) and psychological $50 level, expected to hold dips and keep bulls intact.
Caution on dip below $50 and rising 20DMA ($49.33) which would signal deeper correction.
EIA weekly crude stocks report is in focus today with forecast for 2.67 mln bls draw against last week’s 8.01 mln bls drop.
Stronger than expected draw in oil inventories would additionally boost bullish sentiment and lift oil prices.
Res: 53.90; 54.62; 55.00; 55.50
Sup: 53.21; 52.67; 52.04; 51.68