CRUDE OIL PRICE
WTI crude oil price CFDs finished higher for the first time in seven days yesterday. It bottomed at $57.71 and peaked at $58.69. By the end of the New York session, it had settled at $58.09, 6 cents higher than where it opened. In fact, looking at the daily chart, yesterday’s candle can qualify as a doji. This candle is typically considered as a neutral indicator. However, as you would learn in our forex trading course, the candle forming at a critical support level (trend line support, 100 SMA, and 200 SMA) could indicate that the drop could be running out of steam.
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Data from the American Petroleum Institute (API) yesterday showed that crude oil inventories had a build up for the week ending on January 10. According to its report, inventories had a surplus of 1.1 million barrels. This came as a surprise as analysts had predicted a fall of 474,000 barrels for the week. However, crude oil prices continued to trade higher despite the news.
It may have been brought about by Short-Term Energy report from the Energy Information Administration (EIA). The agency now sees US crude oil production to come in higher in 2020 by 9% at 13.30 million barrels per day with prices up 7.7% at $59.25 from its initial forecast. Meanwhile, its estimate for 2021 are up at 13.71 million barrels per day and prices are 7.1% higher at $64.83. The upgrade in oil prices may have helped the commodity regain its ground on the charts.
For today, the EIA will be releasing its own inventories report. Scheduled at 3:30 pm GMT, it is expected to show a surplus of 400,000 barrels. It is more popular than API’s data and lower-than-expected figures tend to have a bullish effect on crude oil prices.
On the hourly chart, you will need to watch out for resistance at the short-term trend line at $58.37. A strong bullish close above the trend line resistance would mean that the next ceiling is at $59.22 where crude oil prices topped in January 13.
On the other hand, reversal candles at the trend line or even below the long-term rising trend line on the daily chart could mean that there are still sellers. The next support level is at $55.22 where the commodity hit lows in November.