WTI digs a deeper oil-well below trend line support, 61.8% Fibo & prior weekly low

  • WTI crude oil futures settled at $56.59, with spot currently down-4.49% at time of writing. 
  • Stockpiles of crude weighed on the price of oil on Thursday.
  • Global growth risks keep a lid on rallies. 

The price of oil has taken another nosedive on Thursday, this time with global growth concerns accompanied by a surprise Energy Information Administration report that showed that crude supplies edged lower by just 300,000 barrels for the week ended May 24, significantly less than the 1.4 million-barrel declined expected by analysts polled by S&P Global Platts and far lower than The American Petroleum Institute' data on Wednesday that revealed  a much larger decrease of 5.3 million barrels. 

At this juncture, markets are keeping an eye on Iran risks, but are running with the notion of a global slow down, partly down to the protracted trade standoff between the US and China, but also alarmed by negative macro developments on the European continent. An additional factor simmering away in the background is OPEC.

Eyes on OPEC

The recent news that Russia is pushing back against holding an OPEC+ meeting on June 25-26, pushing instead for July 3-4 has been interpreted by the market that Russia does not want to renew the December 2018 supply agreement. However, when factoring in the Saudis budget requirements for higher oil, prices, and their commitment to the cuts, the Russian risk can be treated as temporary noise. 

WTI levels

A lower ow has been printed below the trend line and prior support marked out by the 23rd May drop, extending below the 200 MAs across multiple 1HR, 4HR and daily time frames. This fresh downside has dug out an oil well deeper below the key 61.8% Fibo and prior weekly low, around 57.30.

However, one should be watchful of the 4HR divergence by the same measure which does offer some potential to the upside towards the 20 4HR EMA  - This level coincides with just below the prior trend line support around 58.40, a touch above a 58 the figure and a 50% retracement of recent swing highs and lows (59.68 30 May/56.37 21 May). Above there, 60 the figure comes as the next line in the sand meeting the 200-D EMA. To the downside, 4th Feb highs at 55.73 guard the 50% Fibo of the late Dec swing lows to recent 2018 highs at 54.50. The 200 W EMA at 52.40 ahead of the 38.20% Fibo at 51.64 confluences with 11th Feb major swing low as a key target at 51.26.

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