Technically, the main trend is still up according to the daily swing chart and the moving averages; however, the overall picture weakened with the failure of the trendline support.
The short-term range is $61.76 to $67.28. The market is currently straddling its 50% level at $64.52. The next major range is $58.40 to $67.28. If the selling pressure continues then look for the selling to extend into its pivot at $62.84.
The swing chart trend will change to down if $61.76 is taken out, but the market is expected to remain supported by a pivot at $61.08, the 200-day moving average at $61.03 and the 50-day moving average at $60.72.
In my opinion, the moving averages represent supply disruption support. As long as they hold, it will mean the Middle East War Premium is still intact. If the market breaks the moving average support then consider the war premium gone. At that point, we’ll assume that massive global supply concerns have taken over the market again.
16 Million Barrel Inventory Build and Saudi Output Boost Hammer Prices
Fundamentally, traders are reacting to Wednesday’s U.S. Energy Information Administration (EIA) weekly inventories report that showed a huge increase of 16 million barrels. This was the highest build in three years.
Also impacting the supply side was Saudi Arabia’s boost of oil production and exports in a contingency plan should any U.S. strike on Iran disrupt supplies from the Middle East, sources told Reuters.
