Brent Crude Oil Calm Ahead of US Oil Rig Count Data
WTI crude oil price gave up all of its gains from Tuesday and resumed its down trend in yesterday’s trading. Following the higher-than-expected inventories report, WTI crude oil CFDs steadily traded lower and closed the day with a 97-cent loss at $53.03.
According to the Energy Information Administration (EIA), there was a surplus of 3.5 million barrels of oil in the week ending on January 24. This was much higher than the 700,00-barrel surplus that markets had anticipated. Consequently, crude oil price fell. This is because the uptick in supply suggests that US demand for oil could be lower in the coming weeks or even months.
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As of this writing, we can see that WTI crude oil is trading at $52.75. Connecting the highs and lows on the 4-hour chart since January 6, we can see that the commodity is currently in the middle of the channel.
A closer look at the hourly time frame would show that crude oil price got rejected at the 100 SMA in yesterday’s trading. If sellers continue to dominate today, we could see the commodity fall to this week’s lows around $52.10. If support there does not hold, the next floor could be around $50.75 where the bottom of the channel seems to be. On the other hand, if there are enough buyers in today’s trading, we could see crude oil price re-test the 100 SMA at $53.67. A bullish close above this price could mean that crude oil price may soon trade higher to $55.00 where the top of the channel is.