WTI OIL remains weak after surprise build in oil inventories; EIA report eyed for fresh signals
WTI oil holds in red for the third straight day end extends lower on Wednesday, after accelerating below $65 in late Tuesday on surprise build of US crude inventories.
API report, released late Tuesday, showed unexpected build of crude stocks by 5.3 million barrels compared to forecast for 1 million barrels build.
Oil price trades in corrective pullback from $66.53 (26 Mar high) where rally from $60 zone higher base stalled.
Corrective action was signaled by overbought studies and could extend further, as build of crude stocks had negative impact on oil price, already weighed by increasing US shale oil production, which threatens to further affect efforts of main world oil producers to stabilize oil markets by reducing production.
Daily techs remain in bullish setup and favor limited pullback (ideally to be contained at $64 zone, Fibo 38.2% of $60.11/$66.53 upleg / rising 10SMA) to keep bullish structure intact.
However, risk of deeper pullback on firm break below $64 pivot remains in play, with focus on today’s EIA crude stocks data.
Another upside surprise (weekly crude stocks are forecasted to rise by 0.28 million barrels) would put oil price under fresh pressure and risk extension towards $63 zone (55SMA).
Bullish scenario requires return and close above $65 handle to ease existing downside risk.
Res: 65.00; 65.50; 65.98; 66.40
Sup: 64.37; 64.08; 63.94; 63.32