Has the crude oil price reached a temporary bottom?
The crude oil futures contract extended its downtrend on Wednesday, dipping as low as $65.22 - the lowest level since the September 10 low of $65.27 last year. The decline was driven by weak economic data and geopolitical uncertainty. However, this morning, oil is rebounding, trading back above the $66 level.
Below November-December Lows
The daily chart of crude oil futures shows a clear downtrend that began with the January 15 local high of $79.39. Yesterday, prices broke below the key support level of around $67, marked by November and December lows. This $67 level now acts as short-term resistance.
Inventories: Higher Than Expected
The Crude Oil Inventories report, released yesterday at 10:30 a.m., came in at 3.6 million - significantly higher than the expected 0.6 million. This initially accelerated the market's downtrend, but crude oil rebounded afterward in a "sell the rumor, buy the news" reaction.
Conclusion
Crude oil extended its downtrend yesterday, reaching its lowest level since last September. Today, it's rebounding following the inventory data, weaker USD. However, no clear bullish signals are evident.
Is this a good time to open a short position? I don't think so - the market is approaching strong medium-term support levels and could move sideways or rebound.
For now, my short-term outlook is neutral.
Here’s the breakdown:
- Crude oil continued its downtrend, hitting its lowest level since last September.
- In my opinion, the short-term outlook is neutral.
The full version of today’s analysis - today’s Oil Trading Alert - is bigger than what you read above, and it includes the current Crude Oil futures contract position. I encourage you to subscribe and read the details today (with a single-time 7-day free trial). Oil Trading Alerts are also a part of our Diamond Package that includes Gold Trading Alerts and Stock Trading Alerts.
And if you’re not yet on our free mailing list, I strongly encourage you to join it - you’ll stay up-to-date with our free analyses that will still put you ahead of 99% of investors that don’t have access to this information. Join our free oil newsletter today.
Thank you.
Paul Rejczak,
Stock Trading Strategist