Bullish Crude Oil Bounces Higher, Forming Support Above $70
The economic situation is not very favorable for crude Oil, but it keeps finding bids after every dip and right now we’re in the middle of a bullish phase. Oil turned bearish last week after US WTI failed to reach $80 on Monday, but after a bullish reversal early this week, buyers are having another go and they might even break January’s high.
Oil formed a doji candlestick on the daily chart on Monday above $71, which is a bullish reversing signal after the $7.50 decline following the failure at $80. The price was following a steady uptrend in the first two days and it was on track for the third day of gains in a row today, when the bullish momentum picked up pace, sending the West Texas Intermediate (WTI) futures contract crude almost $3 on the day.
WTI surged by $2.89, or 2.25% from the bottom to the top yesterday, reaching $76.50 per barrel, while the UK Brent crude contract for April climbed by $2.60, or 2.90%, to reach $81.70 per barrel. The increase came amidst heightened tensions in the Middle East, where the region is on edge amid the possibility of further escalation in violence or the prospect of a ceasefire in the Gaza conflict. However, at the moment, tensions are high and Oil is taking advantage of that.
Crude Oil Chart Daily – Predictable Bounce Off the 50 SMA
The 50 daily SMA (yellow) held as support early this week despite being pierced, and buyers started coming back down there. But, if they want to change the trend, they will have to push Oil above the 100 SMA (green) which acted as resistance last week, rejecting the price.
Higher Oil Inventories Offset by Upbeat Global Economy
However, buyers seem more convinced now, as they totally ignored the buildup in the EIA Crude Oil inventories this week. Crude oil output in the United States is expected to grow less than previously estimated, easing fears about a market glut.
According to the EIA data, crude oil stockpiles increased significantly at 5.5M, beating expectations of 1.7 million barrels, although petrol and distillates decreased. The resilience of the US and global economies is becoming more apparent, with early signs indicating that China may be concerned about its slowing development trajectory. So far, OPEC has maintained unity, and sanctions on Venezuela are expected to be reimposed in the near future. These elements influence market sentiment and contribute to continuing dynamics in numerous industries.
US WTI Crude Oil Live Chart
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