On Wednesday, the WTI crude oil prices moved slightly higher recovering from earlier losses. Crude oil fell from 59.50 to 56 even after the Organization of the Petroleum Exporting Countries (OPEC) allowed to increase inventories cuts. The U.S. WTI crude futures ware up by 0 .2% to $56.38 today.
On Tuesday, the OPEC and non-OPEC members collectively decided to pass the 9-month increase of their deal to cut inventories by 1.2 million barrels per day at a meeting in Vienna. Initially, crude oil gained support with this deal oil, but investors started profit-taking as the extension was enough to support the price. We need a more extensive cut for increasing rates.
Lastly, the WTI crude oil slipped after the American Petroleum Institute said, that the U.S. crude outputs dropped by 5 million barrels last week. The draw wasn’t as big as 12 million barrels reported previously, which is why, instead of having a bullish trend in oil prices, we experienced sharp sell-offs.
USOIL – Technical Outlook
On the technical side, crude oil is facing strong support at 56, the 50% Fibonacci support area. Oil has formed a Doji and bullish engulfing pattern on the 4-hour timeframe, which is suggesting a strong bullish bias among traders.
Key Trading Level: 57.32
A bearish breakout of 56.40 support can extend sell-off until 55.50. While on the upper side of 56.40, oil prices can surge further towards 57.50. All the best!