US oil price bounced from fresh five-week low at 47.35 posted on Tuesday and returned above $48.00 handle. The rally was triggered by release of API report that showed stronger than expected drawdown in Crude oil stocks that by 4.2 million barrels in the week ended Apr 28 compared to 2.3 million barrels draw forecasted.
Focus turns on today’s EIA crude inventories report which shows forecast for 2.3 million barrels draw in the week ended Apr 28, compared to the previous week’s draw of 3.6 million barrels.
Oil prices remain under pressure on global supply that remains near record high and offsets impact of OPEC production cut that aims to support oil price.
US oil remains in step descend from $53.74 (12 Apr high) and approaches key med-term supports at $47.07 (higher base / 2017 lows) and $46.44 (top of thick weekly cloud).
Technical studies are firmly bearish (10/200 SMA Death cross is forming at $49.12) that signals additional pressure.
However, hesitation ahead of key $47.07 support could be anticipated and upticks may extend on better- than-expected crude stocks release today.
Thick daily cloud (spanned between $49.70 and $51.03) weighs heavily and cloud base is expected to limit extended upticks.
Alternative scenario requires firm break above psychological $50.00 barrier to ease existing downside pressure.
Res: 48.21, 48.53, 49.26, 49.70
Sup: 47.80, 47.35, 47.07, 46.44
