Oil price has been quite volatile today during the Asian session. Oil remains below $27.50 area as investors are worried about the oversupply amid the COVID-19 pandemic. Can WTI break above $27.50 area? What are the charts and technical indicators are saying? Read more to find further insights into today’s WTI Technical Analysis.
May 7, 2020, | AtoZ Markets – Oil is currently trading around $25.60 area and consolidating. Moreover, the price had a daily bearish close below $27.50 area, but currently quite corrective and indecisive. WTI may retrace down further before continue the bullish trend in the coming days.
Oil Remains Below the Critical Level as Output Cut Not Helping
Oil price has recovered some losses from the New York session earlier this morning. Moreover, WTI futures came with an especially volatile session, dangling between gains of more than 6% and losses down 8%. Besides, the June contract set to end on May 19, and the investors continue to observe the futures movements. Furthermore, Brent Oil futures rose by 0.81% to $29.95 by 2:22 AM GMT and WTI futures gained 1.46% to $24.34.
On the other hand, the U.S. Energy Information Administration (EIA) said overnight that the crude inventories for the week ending May 1 up by 4.59 million barrels. The number was smaller than the analyst predictions of 7.759 million barrels. Along with, EIA also said that the crude Oil production dropped by 200,000 BPD to 11.9 million BPD as OPEC+ and other companies like – Exxon (NYSE: XOM) and Chevron (NYSE: CVX) cut production. While 1.2 million barrels low than March’s record number of 13.1 million BPD.
Besides, Bjornar Tonhaugen, Head of Oil Markets at Rystad Energy, said on an interview with CNBC, “Indications show that for yet another week, storage is continuing to fill up, despite the shut-ins and the output cuts. Demand, which indeed now is on the recovery road, is not yet enough to balance the produced Oil and that Oil has to go somewhere.”
WTI Bears Are Regaining Momentum May Decline Further
According to the Daily chart, Oil sustains below $27.50 area with a daily close and currently trading around $25.60. Moreover, after an extended period of bullish momentum, WTI price may retrace down before sustaining the bullish trend. As per the current price action, if the bears can break below $24 with a daily close, the bears may push lower towards $20 area as a retracement. In addition to this, if the price finds support at $20 area and bounces higher, the bulls may continue the bullish trend towards $27.50 as a first target, and if the price can break above $27.50 area with a daily close, our second target will be $36 in the coming days.
Image: Oil Daily Chart
Furthermore, the dynamic level of 20 EMA is currently residing below the price, which may pull the price down back to the Mean. Besides, the MACD lines are residing below 0.00 level, which indicates bears may sustain the bearish momentum in the process.
To conclude, WTI has achieved a good amount of percentage after a massive drop below the minus figure. Oil bulls are still optimistic about recovering higher in the coming days, but the price needs a deeper retracement before continuing higher.