The rally is over?

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WTI analysis – 6 May 2020

By: Ahura Chalki

After the earlier report of the American Petroleum Institute, which shows that inventory levels of US crude oil, gasoline and distillates stocks in privet sections, stepped lower to 8.400M, compared with the previous 10.000M, WTI tested four weeks high above $26 in earlier Asian season, however, with some correction, trading at $24.45 in the press time.

Even U.S. President Donald Trump had his say, as he tweeted “Oil prices moving up nicely as demand begins again!” on Tuesday morning, today eyes will be on EIA report, however, after many reports from different sources that US production is cutting lower, the expectation for today’s report is not high and the market expect the lower numbers at 7.759M. The question now is, will that reducing will be less than an expectation or not.

Last Friday, the U.S. Baker Hughes Oil Rig Count fell to 325 from the previous 378 confirming that production must be much lower, and lower production means lower inventories.

In the end, since still there is oversupply in the market, as long as more read demand will appear, a sentiment which came in first days of biggest ever supply cut, started from the beginning of May, has not that power to lead the market much higher.

WTI technical overview – Daily Chart

The Sixth consecutive bullish day, pushed the price higher than 23.6% of its Fibonacci, (from January high of $63), while 38.2% Fibo, sitting at $29. In the daily chart, first confirmation for bullish trend at the moment is $29, which is April 3 high as well. If WTI can hold the level, the next key level, will be $36, which 50% of Fibonacci levels. On the flip side, breaching under $20.31, which is 23.6% of Fibonacci as well, makes the next moves of bulls, much harder to confirm themselves.

Pivot point: 24.00

Resistance levels: 27.00 / 28.35

Support levels: 22.70 / 19.70

Today, the expected trading range is between 27.00 support and 22.70 resistance.


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