WTI Crude – Finding support on 95.3

Oil prices rallied earlier this week due to the tornado ravaging Oklahoma, the 5th largest producer of Crude Oil in US. However, price wasn’t able to hold onto the gains, and tumbled back towards 95.0 once more. The strengthening of USD once more played a huge part in the cascade, but bulls would be glad to know that 95.3 continue to hold on strongly in the face of the strong sell-off.

Hourly Chart

From a technical perspective, 95.3 is looking strong with Stochastic readings breaking the Oversold region heading higher. However, price should ideally push above 96.3 to open up the trading range 96.3 – 97.0 once again. Failure to do so may continue to put bearish pressure and suggest that a retest of 95.3 may occur again as the bearish move from yesterday remains intact.

Daily Chart

With the Department of Energy scheduled to release its weekly inventory data today, one may think that the inventory figures may help to provide the nudge needed to break current deadlock and usher in a new directional play. However, looking at historical data, we can see no discernible long term correlation between Inventory numbers and prices. In light of this, it is highly probable that today’s DOE data may only serve to add in yet more volatility but does not help us to determine the mid-long term winners between bulls and bears, and traders should be careful especially if price breaks any significant support/resistance on the news release.

Fundamentally, demand of oil is expected to be weak in 2013, but this is not a new theme, but a common narrative that has been running since the start of 2013. Hence it is highly interesting to see that price of Crude Oil has risen back close to Jan levels. We may be able to see a pullback soon given this divergence between fundamentals and sentiment, but trading on a “maybe” is generally frowned upon, and further confirmations should be sought before drawing a firm conclusion on where price may be headed in the future.

More Links:
Gold Technicals – New resistance found at 1,382
GBP/USD – Reverses to New Six Week Low Near 1.51
AUD/USD – Rally Stalls a Little Around 0.98

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