Wednesday’s Outlook for WTI & Brent Crude Oil
$USO, $OIL
Tuesday, Wall Street saw a choppy day, warring between weaker US macro-economic data and firm energy prices.
Despite falling early in the day, both DJIA and S&P 500 indices marked gains at the end of the day, adding +0.07% and +0.19% respectively, but the NAS Comp dropped -0.47%.
The stock market was helped by energy and financial sectors.
Yet, Apple Inc’s (NASDAQ:AAPL) disappointing earnings result damped sentiment after market closed.
The commodity sector was mixed.
Energy prices strengthened on surprising decline in US inventory, driving the front-month WTI Crude and Brent Crude contracts higher, by +3.28% and +2.83%, respectively.
The US (.DXY) Dollar Index was mixed, rising against Japanese Yen but softening against commodity currencies (AUD<NZD, CAD), although Aussie has retreated this morning as Australian CPI surprised to the downside.
The industry-sponsored API estimated that Crude Oil inventory dropped -1.07-M bbl in the week ended April 22. Fuel stockpiles also fell with gasoline and distillate seen declines of -0.4 and -1-M bbl respectively.
The market expects the DOE/EIA to report a +2.37-M bbl increase in Crude Oil inventory.
Gasoline and distillate stockpiles dropped -0.31 and -0.4-M bbl respectively.
The World Bank (WB) revised higher its Crude Oil price forecast for this year, to 41 from 37 bbl respectively.
The revision is based on expectations that markets should rebalance after a period of oversupply. They lender remains cautious, suggesting that “energy prices could fall further if OPEC increases production significantly and non-OPEC production does not fall as fast as expected.”
The Technical Outlook
The negativity seen on ADX and RSI is not affirmed, while prices failed to stabilize below 42.47.
Trading between 20-Day SMA and 50-Day SMA is Neutral and a break above 43.40 will ease the way towards 44.45 followed by 44.45.
Support: : 43.00 – 42.40 – 41.65
Resistance: : 44.40 – 45.00 – 46.90
Direction: Bullish above 43.40
Stay tuned…
Paul Ebeling
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