The Pullbacks in Oil Getting Deeper, Suggesting A Correction From $90

Crude Oil started to stabilize around $70 in May and in July, it began to climb higher which has turned into a very strong bullish trend. Dips are still being bought in a hurry, and smaller moving averages are serving as support on the H4 chart, which confirms that the buying pressure is strong. We observed a deeper retreat in crude Oil by the middle of August, but the price turned around just below the 200 SMA (purple).

Since then the 20 SMA (gray) has been supporting WTI crude, while this week the 50 SMA (yellow) came into play, as the price retreated lower. There are worries about declining demand from Europe and China due to economic slowdowns, but crude Oil prices have risen amid signs of growing weakness in the global economy. This suggests that rather than demand-side causes, the rise is mostly being driven by supply-side forces.

WTI Oil H4 Chart – MAs Still Holding As Support

Now the 20 SMA is acting as resistance 

Saudi Arabia and OPEC+ members have been talking the market higher, as well as taking action to cut the output. We have also seen some major drawdowns in US crude inventories and yesterday’s report showed another drawdown after just one positive month.

US EIA Crude Inventories

• Crude all inventories -2.135 million versus -2.200 million estimates. The private data yesterday showed a -5.3 million draw.
• Distillates -2.867M versus a build of 0.217M estimate
• Gasoline -0.831M versus a build of 0.317M estimate
• Cushing -2.064M versus -2.45M last week.
• Weekly refinery utilization -1.8% versus -0.5% estimate
• Weekly production 12.9M versus 12.9M last

The private data released late yesterday showed the following:

US WTI Crude Oil Live Chart