Summary:
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Oil moves up to highest level of the week
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Long term support around $71 respected once more
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Inventory data due in next 24 hours
There’s been further gains seen in the price of Oil today, with crude enjoying a nice bounce after falling lower around yesterday’s European close. The market has been under pressure since last week’s DOE inventory release which saw a large decline of more than 3% on the day. Last Wednesday the market was already moving lower but the inventory data and reports of Chinese sanctions on US oil exports saw the selling gather momentum with a high to low drop of around 300 ticks for the day.
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Oil has recovered the majority of the declines seen last week, with the market back above the 61.8% fib. Source: xStation
A large red candle around Monday’s European close saw the lows taken out but buyers managed to defend the $71 level which coincides roughly with longer term support. Looking at a daily chart the possible significance of this level is readily apparent, with the region previously acted as resistance at the start of the year, before offering support on several occasions since price broke decisively above it back in April. The market now appears to have respected the floor of its recent range at 71.00 once more and until we get a break out from either there or the ceiling around 80.50 then the range remains in tact.
Oil remains in a broader range from 71.00-80.54 after once more respecting the lower bound yesterday with a large wick below the D1 candle indicative of strong buying pressure. Source: xStation
Looking ahead there’s the private API inventory numbers due out later this evening before the more widely followed DOE release tomorrow at 3:30PM. As last week showed, these can have a significant impact on the market. Inventories remains pretty low compared to recent years and tomorrow’s DOE number is expected to show a further decline of 2.8M after recording a -1.4M print last time out. However, tonight’s API, while not as immediately market moving can often provide a better reference point than the consensus forecast published by Bloomberg in as far as showing what the market expectations are.
