Crude oil price
WTI crude oil price is trading slightly higher in today’s trading as the bullishness from Saudi Arabia’s production cuts continue to spill over. As of this writing, the commodity is up at $23.78 from its Asian session low at $23.38.
On Monday, Saudi Arabia announced that it would further reduce its oil production by 1 million barrels per day. This was bullish for crude oil price because it indicates that the available supply of the commodity will be lower. With this, the amount of oil produced by the Kingdom will be reduced to 7.5 million barrels per day by June.
What’s next for crude oil price?
Market investors will now be watching out for the EIA’s crude oil inventories report. Due later today at 3:30 pm GMT, it is expected to show a surplus of 4.1 million barrels held in commercial storage. Usually, a higher-than-expected report is bearish for crude oil price because this suggests that demand for the commodity will not pick up soon given the excess in supply. Alternatively, a lower-than-expected report could be bullish for the commodity.
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On the 4-hour time frame, it can be noticed that WTI crude oil price has been consolidating for the past few trading days while maintaining an upward slope. Consequently, a rising wedge chart pattern has formed. This chart pattern is widely interpreted as a bearish reversal signal. And so, a break below the low of May 11 at $22.29 could be considered as a downside break. It could then trigger a drop to $15.53 where the 100 SMA and 50% Fib level (drawing the Fibonacci retracement tool from the low of April 28 to the high of May 12) coincide. This area also seems to align with the rising trendline when you connect the lows of April 21 and April 28.
However, be wary of a strong close above yesterday’s high at $24.54. This may just invalidate this bearish chart pattern and indicate that there are enough buyers to push WTI crude oil price to its April 3 highs at $28.54.