Last week, US WTI (West Texas Intermediate) finished sharply lower as the demand concerns overtook worries about supply disruption in the Middle East. The market began under pressure when output in the Gulf and Mexico started improving after Hurricane Barry moved through the region without causing major havoc on the oil platforms.
Since there was no supply disruption, the traders who “priced in” weaker supply sentiments were likely to liquidate the crude oil stocks. As a result, we have seen the bearish trend in crude oil prices.
Another thing that helped crude oil prices drop was the announcement that Iran would be willing to talk with the United States about its nuclear missile program.
Whereas another surprise for the crude oil buyers was the jump in EIA crude oil inventories on Wednesday, which indicated a drop in crude oil consumption or its demand, discouraging investors to invest in crude oil.
On the technical front, crude oil was trading lower high and lower low pattern which supports the bearish bias in oil. For now, the pattern seems to fades as oil has started gaining due to bullish retracement. Black crack has crossover the resistance level of 56.35 and is likely to head for $57.30.
The 50 and 100 periods moving averages stays around 58 areas, giving us enough room to complete retracement. On the lower side, crude may find support at 55.50 and 54.75 zones.
Key Trading Level: 55.79
WTI Crude Oil – Trading Signal
We are staying bullish above 56.29 with a stop loss below 55.89 and take profit of around 56.60.