Oil higher again but rally in doubt
We’re seeing a second day of gains in the oil market but I’m not getting too excited just yet. The market was feeling toppy prior to Friday’s sell-off, which was further highlighted by WTI making significant declines on a story that was nothing more than a slightly altered rehash of something we’ve heard numerous times before, without substance.
WTI Daily Chart
We may be seeing some gains now but this currently looks like little more than a slight correction of Friday’s declines after price bounced off a key support zone. I wouldn’t be surprised to see this area come under pressure once again with today’s API inventory report – and the EIA report tomorrow – potentially providing the catalyst.
WTI has already run into some resistance around 64.50 which falls between the 50 and 61.8 fib level. While it is now off the daily lows, but that may not offer too much comfort to oil bulls.
WTI 4-Hour Chart
There have been a few interesting headlines today that may be contributing to the oil volatility, including a report that OPEC members subject to the output cut agreement have achieved 132% compliance (Reuters survey) vs 145% in March – this came just before the sell-off today – not to mention to headlines coming out of Venezuela which is another major oil producer, albeit one subject to sanctions that has significantly reduced its exports.