Oil one step from a major buy signal

Thursday brings us a short update on brent oil. This instrument has been heavily bombarded recently by the macro data, not only for oil, but also the macro data for the USD.

Let’s start with the one for oil. Yesterday’s inventories. Data came in hot (bullish for oil) as the number were significantly below expectation, showing a decrease of 4.5 mln barrels from the previous week. Well, how about that?

As for the USD, yesterday’s less hawkish FED was bearish for the dollar, so again, bullish for instruments quoted in the dollar like our oil. So, we had two positive sets of information for oil and yes, brent used it wisely.

Technically, we are very close to a major buy signal. The price bounced off the 100 USD/bbl. (red) creating an inverse head and shoulders pattern (yellow). The recent upswing allowed the price to break the mid-term down trendline (black) and the neckline of the iH&S pattern (red), which actually means it’s up and running.

There’s one last thing left here, and that’s to break the 108 USD/bbl. (green) resistance. Once that happens, we’ll receive a major, legitimate buy signal for black gold. Several minutes ago, we received GDP data from the US that was much worse than expected. This is initially making the USD weaker. Let’s see if that will help oil rise higher. On the other hand, a number confirming a recession is not really the most bullish factor we can think of.