WTI oil trades higher on Wednesday and holding in green for the first time since 26 Oct, when steep bear-leg commenced.
Reports that Russia and Saudi Arabia are discussing cuts in oil production in 2019 gave bears a breather, but recovery may extend if gathers momentum and improves overall negative sentiment, with initial reversal signal to be expected on violation of falling 10SMA ($64.59).
Oil price hit new 7 ½ month low at $61.30 on Tuesday, in extension of strong bearish acceleration, boosted by reduced fears of supply shortage in the market due to sanctions on Iran, as main producers increased output and the US allowed a number of major consumers to extend imports from Iran for some time.
Adding to negative outlook was stronger than expected build of oil inventories (API report on Tuesday showed 7.8 million barrels rise in US crude stocks vs previous week’s 5.7 million barrels build).
US EIA report is due later today and is in focus for fresh signals with stronger build than forecasted (2.4 mln bls build vs previous week’s 3.21 mln bls build) to present fresh obstacle to recovery attempts.
Res: 63.30, 64.12, 64.59, 65.37
Sup: 61.66, 61.30, 61.06, 60.80
