Oil price accelerated higher on Wednesday and is attempting to break above two-day congestion top at $47.00.
Firm break higher is needed to generate stronger direction signal after the price initially broke above daily Tenkan-sen line ($46.74) which capped past two-day action.
Oil received fresh boost from Tuesday’s API oil report which showed inventories falling by 5.8 million barrels last week, well above forecasted draw of 1.8 million barrels. This is seen as initial result of oil production cut, as major oil producers are looking for extension of initial output cut agreement for the next six months in order to support falling oil prices.
EIA weekly crude stocks report, released on Wednesday, showed unexpected fall in oil inventories, showing draw of 5.2 million barrels last week, compared to forecasted 2 million barrels fall and previous week’s 0.9 million barrels draw.
Oil price received strong support from data, with fresh bullish acceleration looking for minimum requirement – close above daily Tenkan-sen, to generate reversal signal which would get confirmation on break above next pivotal barriers at $47.46/56 (Fibo 38.2% of $53.74/$43.74 downleg / falling daily 10SMA).
Broken daily Tenkan-sen now acts as initial support at $46.74, followed by daily low at $46.00.
Res: 47.46; 47.56; 48.00; 48.74
Sup: 47.00; 46.74; 46.00; 45.51
