WTI Crude – Bearish Case Grows on Inventory Build

WTI has continued to trade lower on Thursday as it looks to extend its losing streak to five consecutive sessions. The move today was helped by a larger than expected build in crude inventories that fed into the long standing supply demand story.

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Today’s move has pushed WTI through the descending trend line (albeit one only connected by two lows making the break less significant). This break suggests further declines are in store, assuming we see a daily close below the trend line.

WTI Daily

As highlighted on Monday (WTI – Are Bears Regaining Control), this could bring $42.70-43.20 into consideration. This was a key area of support throughout September.

It’s worth noting that the MACD histogram suggests that the decline may be losing some momentum. If we fail to get a close below the ascending trend line and a reversal signal in price, it may suggest the move is not going to be so straightforward, although there still appears to be a clear bearish bias here. That doesn’t mean that we can’t see a correction though.

WTI 4hr

In the absence of a reversal setup, it will be interesting to see whether we continue to see downside pressure in WTI as a failure to close below the ascending trend line may just be a delay of the move to the downside, rather than a sign that we could see another push higher.

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Craig Erlam

Craig Erlam

Former Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary.

His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News.

Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.