WTI crude oil drops sharply as data show less than expected decline in oil inventory. In the week ending May 24, commercial oil inventories decreased by 0.3 Mbarrels only, versus consensus of -0.9M. WTI is quickly back below 58 handle after the release.
As follow up to last post here, WTI did recover after trying to draw support from 38.2% retracement of 42.05 to 66.49 at 57.15. However, as the subsequent recovery was limited well below 60.03 support turned resistance, there is no sign of bottoming yet. Focus is immediately back on 56.92 temporary low. Break there will extend the fall from 66.49 to 161.8% projection of 66.49 to 60.03 from 63.90 at 53.44.
For now, we’re still viewing the decline from 66.49 as a corrective pull back. Hence, while’s it’s likely deeper than expected, strong support should be found at 61.8% retracement of 42.05 to 66.49 at 51.38 to complete the correction.
If it happens that way, break of 56.92 in WTI should solidify the upside momentum in USD/CAD to retest 1.3664 high.