The price of US WTI crude oil declined even after an IEA report endorsed the OPEC led production cut extension as they try to rebalance the oil market. Iraq seems to be now onboard as well. The US crude oil contract followed stocks downward, overnight and this morning, as risk appetite continues to erode. Losses were exacerbated after API data confirmed that US oil inventories rose by 882,000 barrels last week.
Sentiment in the global financial and commodity markets are souring as the walls close in around US President Donald Trump. We are now seeing a risk-off mood is setting in. This sentiment may keep cycle-sensitive assets, like oil under pressure. It may continue to weaken bond yields. This will boost gold.
Looking at the economic calendar, EIA inventory data should show a draw of 2.47 million barrels on US inventory. A print closer to the API estimate may increase selling pressure. There are also comments from the OPEC economic commission in Vienna. This should lend some support to crude and limit losses.
Crude Oil Technical Analysis
Using the above daily MT 4 chart, let’s discuss today’s daily technical analysis. The above chart notes a bearish dark cloud in place after crude failed to break above the trend line resistance level. This former support is in place since early August 2016 and hints at further weakness.
A daily close below the first downside barrier at 48.20 challenges the next layer of technical support lining up at 47.30. Alternatively, there is an upside barrier lining up at 48.78. A break above this first upside barrier challenges the next layer of resistance lining up at $49.95 per barrel.