WTI Crude Oil Trades Sideways Despite Drop in Inventories
Arslan Butt • 1 min read
During Thursday’s Asian trading hours, WTI crude oil prices were looking directionless despite Wednesday’s decrease in the US inventory report. However, crude oil prices are still trading mostly unchanged on the day near $25.40. Technically, the 4-hour chart shows prices are confined between the narrowing price range represented by trendlines drawn from May 7 and May 13 highs and May 6 and May 7 lows.
The reason for the confined trading could be attributed to the risk-off market sentiment and second wave of coronavirus, which turned out to be one of the key factors that kept a lid on any gains in oil prices. At press time, WTI crude oil prices are currently trading at 25.82 and consolidating in the range between 25.20 and 26.00.
Thus, the breakout can’t be rejected because the US inventory report released on Wednesday showed the first decline in outputs since January. US crude inventories dropped by 745,000 barrels last week, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 4.1 million-barrel rise.
For the time being, investors are cautious about placing any strong positions mainly due to the fear of coronavirus second wave caused by easing lockdowns. The reason for the risk-off market sentiment could also be attributed to the renewed concerns concerning the economic slowdown.
Daily Support and Resistance
Pivot Point 25.25
US oil is trading at 26.04 within a symmetric triangle pattern which is providing triple top resistance at 26.70 along with support at 25.10 and 24.10. While bullish breakout of 26.70 may lead to WTI prices towards 27.30.