Oil Prices bounce Higher this Morning in Asian Trade

Crude oil
Crude oil

The price of the US WTI crude oil contract, bounced higher this morning. There was news that the oil producing country of Ecuador withdrew from the OPEC led production cut scheme. Offsetting this bad news could be that Saudi Arabia is mulling a further export reduction of 1 million barrels peer day. OPEC also invited Libya, right now exempt from the cartel’s coordinated output cuts, to a strategy meeting in St. Petersburg on July 22. Libya might now be brought into the production cut scheme.

The oil rally was short lived as the API reported that US inventories added 1.63 million barrels last week. Up next, is the official EIA data. The EIA is expected to show a 3.5 million barrel drawdown over the same period. If that outcome comes close to the API number, then the WTI benchmark should face further selling pressure. This will come as the hope for a reduction in the global supply dwindles.

Crude Oil Technical Analysis

The price of crude remains below the key layer of technical resistance that lines up at $47.10 per barrel. A daily close above this first upside barrier challenges the next layer of technical resistance lining up at 48.50.

The alternative technical analysis, notes the first downside layer lining up at $45.30 per barrel. The next technical support barrier, of note, lines up at 43.80. This is the May 5 low.

David Frank

David Frank

Chief Market Strategist at CupO'Forex
David has his MA and PhD in Economics. He is a technical analyst who has been trading in the Forex world for over a decade. As an analyst and trader, David believes in the big picture by blending together technical analysis with the fundamentals behind the scenes in the Forex and Bond markets. David’s trading strategy is unique. He blends an understanding of fundamental and macroeconomics with technical analysis to offer a unique view into Forex. He applies several strategies including carry long positions, to take advantage of high yields in non-volatile markets, as well as using quicker, chart related analysis for day trading.
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