WTI crude – Runs out of steam after breakout

Oil loses momentum just after breaking resistance

A second large inventory build in two weeks, reported by EIA on Wednesday, has seen the oil rally stutter just as it was getting going.

A break through an important resistance zone last week looked to have been the catalyst for another pop higher in WTI, with the price having jumped from around $63 to $65 in just a couple of days but already we’re seeing consolidation around these levels and momentum appears to have waned.

WTI Crude Daily Chart

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The rise in inventories accompanied new economic projections by the IMF which highlighted slowing growth around the world and numerous risks to the economy. Reports that Russia may be contemplating raising production and refusing to partake in OPEC+ cuts beyond the current June deadline may also have contributed to oil quickly losing its appeal.

EIA Crude Oil Inventories

There remains numerous supportive factors for oil prices though, with clashes in Libya drawing much attention despite current production being uninterrupted. Above $65, the $67-68 has previously been a major area of support and resistance so we may not have to wait long for the rally to once again run into difficulty, if of course it finds its mojo again.

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.

Craig Erlam

Craig Erlam

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.
Craig Erlam
Craig Erlam

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