WTI oil price stays in red for the second day and extends pullback, probing through initial support provided by rising 10SMA at $64.67.
Oil price was pressured by rising US shale oil output which weighs on OPEC-led efforts to drain oil market from excess supplies and boost oil prices.
Bearish divergence on daily indicators (RSI/MACD/slow stochastic) was negative signal with RSI and slow stochastic heading south after reversing from overbought territory and showing plenty of room downside.
Close below 10SMA today will be next bearish signal as weekly studies are also overbought and warn of correction.
Bears focus next supports at $64.08 (Fibo 23.6% of %55.81/$66.64 rally) and $63.88 (rising 20SMA), with further easing to pressure pivotal support at $62.50 (Fibo 38.2% of $55.81/$66.64). Correction should ideally reverse here to keep underlying bulls intact for fresh attempts higher as prevailing bullish sentiment keeps oil prices supported.
Near-term focus turns towards releases of US weekly crude stocks (API report is due late Tuesday) and EIA report which will be released on Wednesday.
Traders are looking for data to estimate the strength of demand for oil in the US, world’s largest energy consumer, after recent data showed heathy demand which resulted in 10 straight weeks of draws in US crude inventories.
Res: 64.67; 65.54; 66.64; 66.75
Sup: 64.08; 63.88; 62.83; 62.50
