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  • WTI firmed on Wednesday following a decline in U.S. crude supplies, almost double than what was expected and optimism that a trade deal will be achieved between Beijing and the U.S. buoys the price ahead of high-level talks scheduled later this week.  
  • WTI is currently trading at $62.11bbls between a range of $61.0bbls8 and $62.34bbls.

While there has been a fair bit of risk-off this week following the weekend Trump tweets and subsequent confirmations that tariffs will be raised on Chinese imports on Friday,  

Oil prices could see further upside if trade talks do not completely fall apart. With other geopolitical risks flowing through as well, such as Trump tightening the screw on Iran and Venezuelan with respect to sanctions along with the fighting in Libya, then coupled with crack spreads on the rise as we head into peak driving season in the U.S., the fundamentals are stacked in favour of the bulls.  

Crude supply declined by 4 million barrels for the week

As for  U.S. crude supply data, the Energy Information Administration EIA on Wednesday reported that they declined by 4 million barrels for the week ended May 3, beating the 2.2 million barrels expected. The EIA data also showed that gasoline inventories were down 600,000 barrels, while distillate stockpiles edged lower by 200,000 barrels last week.  

WTI levels

Bulls stepped up midweek and the downside has not prevailed. The price is holding above the golden cross and the 50 DMA is acting as support. The price action has pushed the trend line resistance out and bulls can now target 63.05 29. April fractal lows. However, failure there, attention will be paid to the golden cross and then the 200 DMA and 50% Fibo level accumulating in confluence just below the session’s lows at 60.60/59.60 respectively while bulls are a far cry still from the 63 handle. A break of the 50% level opens prospects for the 25th March lows at 58.20 ahead of the late Feb/early March highs guarding a break to the early Feb highs at 55.80.