WTI Crude – 103.0 Holding Despite Strong Bearish Fundamentals

The Department of Energy Crude Oil Inventory came in more bearishly than analysts estimates, growing by 2.6 Million barrels versus consensus estimate of a 1 million drop. This lower than expected implied demand was also seen in Distillate and Gasoline inventories, suggesting that forward demand for Crude will be lower in the future. Hence it is no surprise that Crude prices pushed lower, hitting 103.0 by the end of yesterday’s US session.

Yesterday’s decline can also be attributed to broad risk aversion which drove stocks lower, giving Oil another fundamental reason to trade lower. However, it is difficult to ignore the technical aspect of things, as yesterday’s decline actually started before the US session came into play, and appears to be instigated by the failure to break 104.5 key resistance.  It is also interesting to note that prices continue to straddle 103.0 despite good bearish reasons to drive prices further down, especially since we’ve actually reached 103.0 yesterday with less bearish reasons.

Hourly Chart


Moving forward, if 103.0 continues to hold, the likelihood of a push towards 104.5 increases as it suggest that technical influence continues to reign. Furthermore, after suffering such a huge decline in the past 5 days, some sort of technical pullback should be reasonably expected to begin with. Stochastic readings agrees, with readings being heavily Oversold. However, we only need to look at the last time Stochastic was equally Oversold to know that this does not necessarily equate to a bullish reversal. Prices actually traded lower on 20th Sep despite Stochastic readings moving higher. This is perhaps what bears may need now, where we have an extended consolidation around 103.0 which will provide space/rest for further bearish momentum to enter once again.

More Links:
GBP/USD – Bounces well off Support at 1.60
AUD/USD – Continues to Drift Lower below 0.94
EUR/USD – Reverses Strongly to back above 1.35

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Mingze Wu

Mingze Wu

Currency Analyst at Market Pulse
Based in Singapore, Mingze Wu focuses on trading strategies and technical and fundamental analysis of major currency pairs. He has extensive trading experience across different asset classes and is well-versed in global market fundamentals. In addition to contributing articles to MarketPulseFX, Mingze centers on forex and macro-economic trends impacting the Asia Pacific region.
Mingze Wu