US oil maintains firm near-term tone and probes above $48.00 barrier on extension of strong rally from Wednesday, sparked by stronger than expected fall in US crude inventories. Also, Saudi Arabia is going to reduce supplies to Asia for 7 million barrels in June, which additionally supported oil price recovery.
Today’s break above important barrier at $47.56 (Fibo 38.2% of $53.74/$43.74 fall) generated additional bullish signal.
Fresh rally approached barrier at $48.33 (broken Fibo 23.6% of larger $26.04/$55.22 recovery leg) and may extend gains towards $48.74 (daily Kijun-sen) on renewed bullish sentiment.
However, recovery may face strong headwinds on bearish daily studies and 20/200SMA Death-cross that was formed at $49.26 and produces significant pressure.
In addition, slow stochastic is approaching overbought territory on daily chart and may signal limited upside.
To neutralize bearish threats, price needs to clear 200SMA ($49.26) and psychological $50.00 barrier, which lies near Fibo 61.8% of $53.74/$43.74 descend and is reinforced by falling 55SMA.
Broken 10SMA offers initial support at $47.32 (daily low) and near-term action is expected to remain bullishly aligned while the latter holds.
Res: 48.33; 48.74; 49.00; 49.26
Sup: 47.32; 46.96; 46.76; 46.00