Oil finding resistance after inventory data
Oil is trading marginally lower so far today, with a stronger dollar potentially being a drag on WTI crude. Yesterday’s inventory report from EIA may also have taken some of edge off the rally, with the drawdown having been lower than that reported by API a day earlier. Oil is in an interesting place though because on the one hand it recently broke through notable technical resistance but on the other it did so as momentum lagged.
Reports of a tighter oil market even as the US pumps at record rates will be encouraging to OPEC+ given the efforts made this year to rebalance, although it will cast significant doubt over Russia’s participation in any extension to the end of the year, with current cuts set to expire in June.
WTI Daily Chart
From a technical perspective, we’ve been range-bound for the last 10 days or so, between $63 and $64.50. It’s not yet clear which direction the breakout will come but should it be to the downside, it could trigger an interesting correction in oil.
WTI Crude 4-Hour Chart
Given the size of what is currently looking like a triple top, we get a possible price projection of $61.50. While this is clearly not a guarantee or a limit, it is interesting that this would take us back to the previous consolidation zone, which lies within the 200 and 233-day simple moving average band that we broke above earlier on in April. A rotation off here would represent confirmation of the break and be a potentially bullish signal.