Oil off session highs after bearish crude stockpiles report

Oil prices are having a great start to the year and are poised to have the best weekly advance since June.  West Texas Intermediate crude was higher on the optimism that hit Wall Street following the robust NFP report and dovish tone from Fed Chair Powell.  Powell noted that Fed policy is flexible and officials are “listening carefully” to the financial markets.  Oil came off the intra-day highs after the Energy Information Administration weekly report showed oil inventories rose 7,000 barrels last week.  Expectations were for a draw-down of 2.2 million barrels.  Expectations were high for inventories to come down and we could see the $50 level prove to be key resistance in the short-term.

The Canadian dollar is poised to have the best weekly gain since March, benefiting from the strong rebound that oil has had since Christmas Eve.

Price action on the West Texas Intermediate (WTI) crude daily chart shows key low of $42.36 held and the bullish rebound is tentatively respecting the psychological $50 handle.  Today’s rally tentatively formed a bearish Gartley pattern.  Point D was targeted with the 61.8% Fibonacci level of the X to A leg and the 161.8% Fibonacci expansion level of the B to C move.  If the pattern is valid, we could see price retest the $46 region.  If the pattern is invalidated and price surges above the $50 level, $53.50 will be major resistance.  To the downside, the $40 level remains critical support.

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Ed Moya

Ed Moya

Senior Market Analyst at OANDA
With more than 20 years’ trading experience, Ed Moya is a market analyst with OANDA, producing up-to-the-minute fundamental analysis of geo-political events and monetary policies in the US, Europe, the Middle East and North Africa. Over the course of his career, he has worked with some of the world’s leading forex brokerages and research departments including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including BNN, CNBC, Fox Business, and Bloomberg. He is often quoted in leading print and online publications such as the Wall Street Journal and the Washington Post. He holds a BA in Economics from Rutgers University. Follow Ed on Twitter @edjmoya ‏
Ed Moya