WTI crude has been range bound for more than a week now in a sign that prices have finally stabilised. The lower end of the range can be found around $47.85 – $48 while the upper end of the range can be found around $50.70.
Over the last few trading sessions, it appeared to find a little upward momentum. While $50.70 continued to provide a roof for price action, higher lows were being made which may have suggested that traders are becoming more bullish and a break to the upside was possible.
This may have been impacted by disruptions to oil fields in Libya or Saudi Arabia hiking the price to Asia and the US due to an apparent increase in demand. While this would affect the price of Brent crude more so, it is unlikely that WTI would be unaffected.
The release of the EIA crude oil inventories on Wednesday showed a much larger than expected build of 10.303 million barrels, raising the issue once again of supply far exceeding demand. Following the release WTI broke lower again and while it may not yet have broken the most recent lows yet, or the neckline of the double top, it may have ended any hope of a break above $50.70 for now.
A break of the double top could prompt a move back towards the bottom of the range, between $47.85 – $48, or even a little further with price having reached $47.23 on 26 February before closing back inside the range.