Crude oil price fell % on Wednesday, as demand outlook fears resurfaced. Inflation uncertainties and rising coronavirus infections in Asia soured risky sentiment ahead of the FOMC minutes.
Also impacting crude oil prices were rumours that the Iran nuclear talks were progressing. If a deal is signed, Iran’s oil output would add to the global supply, which could depress prices.
Further cementing the bearish pull on prices was the crude oil inventories report, which showed a 1.3million barrels increase in the week ended May 14. This number exceeded the previous figure that showed a shortfall of 400,000 barrels. Analysts had predicted a build of 1.5 million barrels.
The bearish flag is finally showing signs of capitulation, with the intraday violation of the lower border. This violation also breached the 67.74 and 66.81 price support level, but an intraday bounce has taken prices back towards the 66.81 price mark. A rejection and resulting downward move confirms the flag’s breakdown, with the measured move aiming to approach the 62.21 support mark. This move needs to take out 65.95 along the way.
On the flip aide, a further extension of the advance beyond 67.74 opens the door towards 70.01. 71.44 and 73.34 are additional resistance targets. Only when price approaches the latter will the flag’s expected outcome be invalidated.
