WTI OIL – daily cloud top contained pullback for now but deeper dips not ruled out; EIA report in focus for fresh signals
WTI oil hit new low at $62.82 on Wednesday, in extension of previous day’s strong fall, when oil price accelerated lower on downbeat supply data.
API report, released late Tuesday showed build in crude inventories of 0.93 million barrels last week, which put oil price under increased pressure despite the release was well below forecasted build of 2.7 million barrels.
Pullback from new three-week high at $64.22 was signaled by reversal of daily slow stochastic from overbought territory, which also formed bearish divergence, reinforcing negative signal.
Pullback may extend further as indicator shows a plenty of room at the downside and forecast for EIA crude stocks report, due later today, shows expectations for 2.4 million barrels build of crude inventories, compared to 1.61 million barrels draw previous week, which could further deflate oil price.
Daily techs show strong momentum, with near-term action being underpinned by 10/20SMA bull-cross and top of rising daily cloud, but contradicted by overbought conditions.
Brief recovery today was so far capped by 30SMA, keeping the downside at risk, with stronger downside action requiring penetration of daily cloud (cloud top lies at $62.48), to expose next pivotal support at $61.92 (Fibo 38.2% of $58.19/$64.22 rally, reinforced by rising 55SMA), with break here to generate strong bearish signal.
Conversely, stronger recovery above 30SMA and repeated close above daily cloud would sideline immediate downside risk, however, return above $63.36 (cracked Fibo 61.8% of $66.64/$58.06 fall) is needed to neutralize and generate stronger bullish signal.
Res: 63.09; 63.36; 64.07; 64.22
Sup: 62.48; 62.35; 62.13; 61.92