WTI settles lower on Wednesday, but bullish fundamentals could outstrip technical bearish case impact

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  • Oil prices have been rejected at the highs of four sessions of consecutive gains and WTI currently trades at $65.89, between the day’s range of $65.75 and $66.40 on a spot basis. 
  • The tense geopolitical landscape continues to support energy markets, but technicals are stretched. 

The price of oil has been under demand of late, in most recent trade on the back of the USA’s Iran policy weighing in on the supply side sentiment. However, yesterdays API release showed a large crude build, along with a gasoline build, which has kept the market under pressure mid-week.

“As always however, the API data should be taken with a grain of salt,” analysts at TD Securities argued,  adding, “Given the “maximum pressure” campaign on Iran, and a likely patient approach from OPEC with respect to offsetting any barrels lost, along with coming refiner demand amid attractive cracks, we think the stage has been set for a temporary dislocation in oil prices towards $67-70/bbl for WTI, or $77-80/bbl in Brent in the short term.”

WTI levels

However, on a technical basis, the charts are in overbought territory. Should fundamentals outstrip a technical bearish bias, prices can continue higher so long as the lows of the day hold which will open the case for a test of 69.50 and the 70 psychological level. But given how coiled the stochastics are across multiple time frames,  there is an overwhelming case for the downside and in such a breakout scenario, the 8th April’s low, 63.15, guards the case for 61.80 and then the 200-D SMA. 

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