WTI Oil Outlook: Oil Risks Deeper Pullback On Surprise Build Of Inventories

The WTI oil extends weakness on Thursday and hit two-week low, following Wednesday’s 2.8% drop (the biggest one-day loss since Aug 4).

Oil prices came under increased pressure on surprise rise of US crude inventories last week (4.26 mln bls vs expected 1.91 mln bls build) and rising cases of Covid-19 in Europe, Russia and some parts of China that hurts expectations for an economic and oil demand recovery.

Adding to negative near-term outlook are expectations that the US economy grew at the slowest pace in more than one year in the third quarter, amid resurgence of coronavirus infections and supply shortages.

Daily chart studies started to weaken on extension of pullback from new 7-year peak ($85.39) that cracked 20DMA support ($80.67) and threaten of attack at more significant supports at $80 / $79.75 (psychological / bull-trendline off Aug 23 low at $61.79 / Fibo 23.6% of $61.83/$85.39).

Break of these levels would generate initial reversal signal and open way for deeper correction of $61.83/$85.39).

Res: 82.74, 84.46, 85.39, 85.90.
Sup: 80.67, 80.00, 79.75, 78.16.