US crude rally loses strength as demand concerns reappear
The combination of improved risk appetite and growing geopolitical tensions has benefitted oil prices after their sustained pullback last week. US crude (WTI) managed to push above $80 per barrel on Monday for the first time in three weeks as buyers rushed to get in at more favourable levels after the price of a barrel dropped to $72 earlier last week.
But Tuesday’s trading saw some indecision creep into the bullish setup as slowing global demand overshadowed supply concerns after the International Energy Agency and OPEC flagged softening consumption in China this week. Meanwhile, the American Petroleum Institute (API) reported a drawdown in U.S. crude inventories of 5.2 million barrels, far more than the 2 million forecasted. Further inventories data will be released today, which alongside the US CPI data, could bring some volatility to oil markets.
For now, WTI seems a little lost for direction just below its key support/resistance range of 80.65 – 82.54. The RSI has started to lose strength in the rise above the 50 mark which suggests a possible lack of commitment for the rally to go further. $80.22 seems like the immediate resistance to break, whilst support could arise at the 200-day SMA at $77.89.
But Tuesday’s trading saw some indecision creep into the bullish setup as slowing global demand overshadowed supply concerns after the International Energy Agency and OPEC flagged softening consumption in China this week. Meanwhile, the American Petroleum Institute (API) reported a drawdown in U.S. crude inventories of 5.2 million barrels, far more than the 2 million forecasted. Further inventories data will be released today, which alongside the US CPI data, could bring some volatility to oil markets.
For now, WTI seems a little lost for direction just below its key support/resistance range of 80.65 – 82.54. The RSI has started to lose strength in the rise above the 50 mark which suggests a possible lack of commitment for the rally to go further. $80.22 seems like the immediate resistance to break, whilst support could arise at the 200-day SMA at $77.89.
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