WTI OIL Outlook: Oil Price May Extend Lower if US Crude Stocks Rise

Technical analysis of Forex market

WTI oil price dipped to $55.80 on Wednesday, following double rejection at $57 zone on Mon/Tue, pressured by unexpected rise in US crude stocks (API report on Tuesday showed build of 7.9 mln bls compared to last week’s 4.2 mln bls draw) and stronger dollar.

The price bounced briefly after US ADP private sector employment data which fell below expectations (Feb 183K vs 189K f/c) but strong upside revision of Jan’s figure (300K from 213K) signals strength of labor in private sector and offsets negative impact for dollar and support for oil prices. Markets await release of EIA report (1.2 mln bls build vs last week’s surprise 8.4 mln bls draw).

Another build in crude inventories would add to oil’s negative near-term outlook and risk test of significant supports at $55.55 (broken Fibo barrier/rising 20SMA) and $55.01 (26 Feb trough/converged 30/100SMA’s) clear break of which would generate initial signal of double-top ($55.79/85) and reversal.

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Res: 56.38; 57.17; 57.40; 57.85
Sup: 55.55; 55.01; 54.54; 53.76

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