Crude Oil Tests Double Top – Bearish Retracement In Play!
Arslan Butt • 2 min read
WTI crude oil prices rose and are still extending gain from the previous session mainly due to supply threats. As well as, the decreased concerns of coronavirus after a decline in the new coronavirus cases also supporting oil prices. West Texas Intermediate (WTI) crude futures (CLc1) climbed 38 cents, or 0.7%, to $53.67 per barrel. WTI has risen in six out of seven sessions going back to February 11.
As we already mentioned that the supply concerns are helping to divert the focus of the market from the virus. It is worth to mention that the Libyan ports and oilfields were closed due to continuous conflict, helped the oil buyers. Moreover, the US restrictions on Russian oil giant Rosneft’s trading subsidiary, blaming it for providing a financial lifeline to Venezuela’s government, also kept the bullish tone around oil.
Meantime, US industry data showing a bigger-than-expected build in crude oil inventories helped to cap the price gains. The US crude stocks increased by 4.16 million barrels in the week to February 14, agiasnt the analyst expectations for a build of 2.5 million barrels, data from industry group the American Petroleum Institute showed on Wednesday.
On the other hand, China’s decision to cut its benchmark lending rate on Thursday also helped decrease concerns about demand disruption in the world’s second-biggest oil consumer and its largest crude oil importer. At the virus front, China reported 349 new confirmed cases in Hubei province on Wednesday, which are lowest in more than three weeks, whereas the death toll rose by 108, down from 132 the previous day.
Looking forward, traders all eyes will be on the US Energy Information Administration (EIA) weekly crude inventory report which is scheduled to release at 1600 GMT for a fresh trading impetus.
Daily Support and Resistance
Pivot Point 53.68
Technically, WTI crude oil prices are soaring to test the double top area of 54.350. On the 4-hour timeframe, the closing of candles below these levels is suggesting chances of bearish bias in the crude oil.
The US Oil may exhibit a slight bearish retracement until a 38.2% level of 52.85 and a 50% retracement level of 52.48%. On these levels, more buying can be seen. On the other hand, the 20 and 50 EMA is also suggesting the chances of more buying in WTI.
The idea is to trade bearish below 53.75 with a stop loss above 54 and take profit at 53.20 and 52.85. Good luck!