WTI bears are lurking and eye a correction for coming days

  • WTI is bullish at the start of the week but the market structure is compelling for the downside.
  • The bears are looking for a correction of the daily bullish impulse.

At $115.74, the price of West Texas Intermediate (WTI) crude oil is higher by 0.57% after rising from a low of $114.88 to a high of $115.78. The black gold was rising on Friday as the US is poised to begin the summer driving season on the Memorial Day weekend.

Oil price of oil got a boost last Wednesday when the Energy Information Administration announced that US gasoline inventories fell by 0.5-million barrels in the prior week, leaving them 8% under the five-year average despite higher refinery output. This comes at a time when the driving season in the US is starting and there are few indications that the cost of the fuel is deterring drivers. This enabled crude oil prices to post their fifth weekly gain to close at their highest level since early March amid signs of strong demand.

Additionally, prices jumped late on Friday on reports that Iran’s paramilitary Revolutionary Guard said its navy had seized two Greek oil tankers in the Persian Gulf because of unspecified “violations”, analysts at ANZ Bank explained.

”This raises the spectre of further disruptions to oil flows through the Strait of Hormuz, which carries a third of the world’s trade.”

”The market has been on the edge as the EU tries to negotiate a sanction package which includes a ban on Russian oil. However, it failed holding to reach an agreement in discussions over the weekend, with Hungary still out on a better deal. Further meetings are planned on Monday and a deal is still possible.”

Meanwhile, ”the OPEC+ group of producers is also contributing to higher supply risk as the group materially underproduces against its quotas, following a decade of underinvestment which has raised operational risks in West Africa,” analysts at TD Securities explained.

WTI technical analysis

The price has left a daily W-formation on the chart and would be expected to revert to test the neckline of the pattern near 111.95.

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