WTI oil is consolidating after strong fall in past two days, bears to remain in play below $80
WTI oil is consolidating within a tight range on Thursday morning after falling 6.6% in past two days.
Strong sell-off was sparked by easing worries over supply disruptions in the Middle East and growing concerns about demand from the US and China, world’s two largest consumers.
Recent economic data from China were below expectations, though partially balanced by still strong oil imports, while US crude inventories increased, pointing to weakening demand.
Oil price fell to the lowest in nearly four months that weakened near-term outlook as break of key technical supports warn of further weakness.
Loss of psychological $80 support (oil registered the first daily close below $80 since Aug 28) and extension and close below next significant supports at $78.09 and $77.71 (200DMA / Fibo 61.8% retracement of $67.02/$95.00) threatens of deeper drop.
Daily studies are in full bearish configuration but oversold, which may keep bears on hold for consolidation before fresh push lower, as the WTI contract is on track for the third consecutive and strong weekly loss and about to break below thick daily Ichimoku cloud.
Broken Fibo support and 200DMA ($77.71/$78.09) reverted to solid resistances which should ideally cap and guard upper pivot at $80 (psychological, reinforced by daily Tenkan-sen) break of which would harm larger bears and sideline immediate downside risk.
Res: 76.21; 77.71; 78.09; 80.00
Sup: 74.92; 73.62; 72.70; 70.20