WTI Price Forecast: Price consolidation continues

WTI trades in a sideways manner in a narrowing price range.
The US reports the first weekly decline in stockpiles since January.
Risk-off, however, looks to be keeping oil bulls at bay.

Omkar Godbole FXStreet Contributor

West Texas Intermediate is again lacking a clear directional bias despite Wednesday's bullish US inventory report.

Trapped in a range

The black gold is currently trading largely unchanged on the day near $25.40. The 4-hour chart shows prices are stuck in a narrowing price range represented by trendlines drawn from May 7 and May 13 highs and May 6 and May 7 lows.

A range breakout would imply a continuation of the recovery rally from lows below $10 observed in April. However, a bearish reversal would be confirmed if the range is breached to the downside.

Bullish inventory report

A breakout cannot be ruled out, as the US inventory report released Wednesday showed the first decline in stockpiles since January. The US crude stockpiles fell by 745,000 barrels last week, the Energy Information Administration said, compared with analysts’ expectations in a Reuters poll for a 4.1 million-barrel rise.

So far, however, the buyers have refrained from stepping in, possibly due to fears that easing of lockdown measures will trigger a second wave of coronavirus infections. Also, the risk sentiment has weakened due to renewed concerns regarding the economic downturn.

The US stocks fell on Wednesday after the Federal Reserve's Powell warned of dire consequences if lawmakers don’t do enough to protect the economy.

Technical levels

1. R3 28.52
2. R2 27.72
3. R1 26.82
PP 26.02
1. S1 25.11
2. S2 24.32
3. S3 23.41

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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