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USOil: 0.5% gain at $51.60

Market Analysis

USOil, H4

WTI crude hadn’t taken the EIA reported inventory build very well yesterday, as the front contract fell, with prices off more than $1/bbl from earlier one-month highs of $51.88. Hence there was a brief hiccup on yields and stocks after the EIA build knocked WTI crude back below $51, but that quickly reversed into the Fed minutes.

Today, front-month WTI crude is showing a gain of 0.5% presently, at $51.60, though remains off yesterday’s one-month peak at $51.88. The gain marks a notable price action as it follows rise in U.S. inventories in the latest reporting week, with the lack of sustained selling suggesting there may be a shift in the underlying demand/supply balance in the crude market, which tallies with reports of tightening supply in Asia.

USOil upside trend however has begun since last week rising from year lows, i.e. 47.07. The commodity presents a bullish movement, above the 200 Day EMA at 48.70 but also above the key level of 51.00. The 4-hour chart prompted a long position due to the hold at 200-period EMA of 50.80 level several times today. Hence based on a 14 period ATR number, target was set at 52.00, which is the confluence of the 61.8 Fibonacci level. Target 2 is at 52.65. Additionally, in the 1-hour and 4 hour charts, MACD and Parabolic SAR remain positive. The higher time frame Daily and Weekly charts are also in strong up trends, with RSI sloping upwards at 59.

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Andria Pichidi

Market Analyst

HotForex

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