Oil price dropped sharply overnight after International Energy Agency (IEA) Executive Director Fatih Birol said there would be a surplus of as mush as 1m bpd of oil in the first half of the year. He said, there is an “abundance of energy supply” in oil and gas. And it’s the “reason that recent incidents we have seen – with the Iranian general killed, Libya unrest – didn’t boost international oil prices.”
WTI’s fall from 65.38 resumed by taking out 57.35 support and hits as low as 55.60 so far. Such decline is seen as a leg inside the sideway pattern from 66.49. With 55 day EMA firmly taken out not, further fall should be seen to retest 50.84 key support level. Strong support should be seen from there to bring rebound. For now, break of 59.56 resistance is needed to indicate completion of the decline. Otherwise, near term outlook stays bearish in case of recovery.