Can crude oil break above the key $70 level after positive inventory data?
Wednesday brought advance for crude oil futures as the contract gained 0.94%, continuing its recent uptrend.
Today, oil continues testing the key level of $70, which has recently acted as resistance. The ongoing stock market uncertainty continues to influence oil prices.
Oil: Challenging $70
As mentioned in previous analyses, crude oil has been in a downtrend since its January 15 local high of $79.39. However, recent price action suggests a potential shift in momentum as prices reach the important $70 resistance level.
Inventories: Surprising Drawdown
Yesterday's inventory data showed a significant drawdown of 3.3 million barrels versus the expected build of 1.5 million, providing fundamental support for bulls.
Meanwhile, market participants are monitoring potential trade war risks that could impact global economic growth and oil demand.
Conclusion
Crude oil is trading near the key $70 level following the surprising inventory drawdown. Despite this positive fundamental data, broader market uncertainty continues to impact price action.
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.
I think that no positions are justified from the risk/reward point of view.
Here’s the breakdown:
- Crude oil has remained near the key $70 level following positive inventory data.
- In my opinion, the short-term outlook is neutral, and no speculative positions are justified from the risk/reward point of view.
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Thank you.
Paul Rejczak,
Stock Trading Strategist