Current trend

This week, the price of WTI Crude Oil tested 77.75, having closed above it yesterday amid a decline in oil reserves and lower inflation in the United States.

According to a report from the Energy Information Administration of the US Department of Energy (EIA), over the past week, the volume of US strategic fuel reserves adjusted by –2.508M barrels, exceeding forecasts of –0.400M and the previous value of –1.362M, supporting the asset. In addition, the positive dynamics are due to the American dollar’s decrease against weakening inflationary pressure. The April consumer price index changed from 0.4% to 0.3%, below the forecast of 0.4%, and the core indicator amounted to 0.3% compared to 0.4% earlier, justifying preliminary estimates. If inflation slows further, US Fed officials may switch to dovish rhetoric, which will affect the national currency negatively and support energy prices.

There is a correction in the oil market. According to the latest report from the US Commodity Futures Trading Commission (CFTC), last week, net speculative positions in WTI Crude Oil decreased from 265.5K to 215.4K. As for the dynamics, the reduction in positions occurred in categories not backed by real money, which means that these are short-term players who do not have a significant impact on the quotes. Thus, the balance of the “bulls” among the producers amounted to 330.129K against 300.669K for the “bears”. Last week, buyers increased their positions by 2.599K contracts, while sellers increased their positions by 4.647K transactions, reflecting a decrease in the activity of trading participants.

Based on these factors, we can assume that WTI Crude Oil will rise to the April high of 87.47 in the long term.

Support and resistance

The long-term trend is upward: this week, the price tested the support level of 77.75. Today, it rises towards 81.93, where a downward reversal is expected. In case of a breakout, the positive dynamics may continue and reach 84.53.

The medium-term trend is downward: yesterday, the quotes fell into zone 2 (76.99–76.45). Large sales were liquidated, and the asset began a correction, within which it can grow to the key trend resistance area 82.66–82.12, after which short positions, with the target in zone 2 are relevant.

Resistance levels: 81.93, 84.53, 87.47.

Support levels: 77.75, 75.60, 72.11.

Trading tips

Long positions may be opened from 78.30, with the target at 81.93 and stop loss 76.80. Implementation time: 9–12 days.

Short positions may be opened below 76.80, with the target at 72.11 and stop loss 78.80.