Crude oil futures finally managed to find some bullish momentum today, courtesy of the oil inventories from Cushing, which helped oil to reclaim the $100 per barrel level, to currently trade at the time of writing at $101.26 per barrel. Starting with the technical perspective, the bearish tone has been self evident for the last few weeks, as each level of potential support was breached in the move lower. The first to fail was at $103 per barrel with the next, and deeper level at $101 per barrel, also failing to halt the slide. Finally in yesterday’s oil trading session, the $99.20 level provided a temporary platform, and coupled with a surge in buying at this level, as evidenced by the daily volume, the candle closed with a deep week and 4 cents shy of the $100 per barrel level. Given yesterday’s volume and associated price action, which was clearly stopping volume, as the big money moved into the market at this level to buy. The depth of the lower wick sent its own clear signal of a possible bounce higher. It was no surprise therefore to see oil spike higher today, helped by the oil inventories which came in hugely over target, with a massive draw of -7.5M bbls against a forecast of -2.1M bbls sending oil prices up and driving through the deep resistance in this region.
The longer term outlook for oil remains bearish, with today’s price action simply a minor reversal higher, with the commodity likely to pause before moving lower once again in the medium term. Any move through the $99 per barrel support region will require sustained and rising volumes to drive it through this level and down towards the $96 per barrel region, where the current negative tone may finally run out of steam.
By Anna Coulling