Crude oil price slipped again yesterday because of worries that oil surplus might be difficult to deal with. Data released by the Energy Information Administration (EIA) showed that US crude inventory decline was not as much as expected. However, in Asian session the crude oil rebounded.
According to EIA report, US crude inventory was recorded at -2.5 million barrels. This number was not in line with analysts’ prediction at -3 million barrels. It indicates that demand for gasoline is weak this summer.
The EIA report was released a few hours after the International Energy Agency released its monthly report and warned that oversupply potentially will threat the price recovery process.
On 4-hrs chart, we can see that the oil price is still traded below 20 MA and 50 MA. A pull-back move has occurred and the price is approaching the Fibonacci resistance area at 45.87-46.77. On the same chart, stochastic has crossed up while RSI is flat just above the oversold area.
As trading strategy, watch for bearish signal confirmation on a pull-back move to within the Fib’s resistance area to go short with target at 45.31 and 44.41 in extension, but be careful if the price managed to break above 46.77 because it possibly will turn the bias bullish and may be followed by a bullish move up to 47.33-48.23.
SELL on bearish signal confirmation within 45.87-46.77
S/L: 47.05; T/P: 45.31 or 44.41