Bullish momentum built up this past weekend, sending WTI Crude Oil Futures (NYMEX: CL) surging 6.27% week-to-date following the announcement of a crude oil output cut of 1.16M barrels per day by OPEC+. The Crude oil prices surged on the back of expectations of demand outweighing supply as a result.
Adding to the bullish cocktail was a higher-than-expected drop in the crude oil inventory count by the EIA. Inventories from the prior week declined by 3.739M barrels compared to a decline of 2.329M expected. The sharp drop in inventories against consensus signals resilient demand, which could be positive for crude oil prices amid a supply cut.
The WTI Crude Oil Futures nudged higher to keep a strong uptrend intact, with price trading above the 100-day moving average and breaking above prior resistance levels convincingly. The breakout above the $76.90 per barrel (BLL) level formed a support level, while resistance is set at the $81.97 BLL level.
Volumes declined, and price is consolidating in a symmetrical triangle while traders await key economic data to make the next move. If volumes pick up steam and price breaks out of either side of the symmetrical triangle, an extended move in the direction of the breakout could be validated.
A breakout to the upside will likely entice bulls to aim for the $81.97 BLL, while a breakout to the downside of the pattern will have bears looking to the $76.90 BLL level with interest.
With the output cut news relatively priced into the market, the next probable point of interest will be the Non-Farm Payrolls (NFP). The U.S. economy is showing signs of fragility after the labour market and manufacturing sectors posted weaker readings for the past month. Crude oil prices will likely be adversely affected by a slowing global economy. However, traders can expect prices to be supported by the output cuts. The $76.90 and $81.97 BLL levels will be key to watch.
Source: EIA, Reuters, TradingView