WTI Crude Oil Trades At January Highs Of $38

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Shrugging off inventory buildup and led by a weaker US Dollar and a broad commodity rally, Crude oil prices are back trading near January 2016 highs with potential for further upside in store

Following up from the previous week’s Crude Oil technical analysis, WTI Crude Oil has posted strong gains this week to trade near the $38 handle. The gains came as the weekly inventory report showed an increase in the US commercial stockpiles rising 3.9 million barrels, more than the expected 3 million barrels. The increase in the stockpiles came as the previous week saw record inventory levels of 10.4 million barrels. However, the gains came as Cushing stockpiles of gasoline and distillate inventories fell below estimates. The report comes after EIA lowered its price forecasts, noting that Brent Crude Oil and WTI would average around $34 in 2016. The recent rally in the commodity prices saw many big names calling the rally ‘unsustainable’

OPEC and non-OPEC members are scheduled to meet on March 20th according to Iraq officials with the main agenda being the output freeze deal alongside discussing other ways to stabilize the Oil markets. Iran remains a strong opponent of the idea as it has reiterated that it would continue to boost production to reach the pre-sanction levels while Kuwait’s oil minister said on Tuesday that the country would freeze production only if all the other major oil producing nations participate in the freeze.

While Oil prices might be enjoying a rally alongside a weaker US Dollar supporting the short-term gains, it is very likely that the March 20th meeting could be a big risk.

Crude Oil Technical Outlook

Oil prices have been bullish for the past three weeks and the upside momentum is likely to see price continue towards the $44 – $44.5 support. However, there is a risk of a retest back to the recently broken trend line near the $32.7 handle, especially if the 38.25 minor resistance caps the gains. Overall, Crude Oil prices are bullish on the weekly chart with the risk of a pullback to $32.70. Only a convincing close below the $32.70 handle could put the upside bias to question.