WTI Crude Oil Intraday: Supported by Lower Output Expectations

Saudi Arabia announced plans to cut oil production in June by an extra 1 million barrels a day to 7.5 million, easing supply side concerns...

Energy 2

WTI crude oil futures (June contract) rallied 6.8% to $25.78 a barrel yesterday, boosted by expectations of reduced oil supply. Saudi Arabia announced plans to cut oil production in June by an extra 1 million barrels a day to 7.5 million, the lowest level since 2002. Meanwhile, the U.S. Energy Information Administration lowered its 2020 domestic oil production forecast to an average 11.7 million barrels per day, down 0.5 million barrels a day from 2019.

Source: Trading Economics

On the other hand, the American Petroleum Institute estimated that U.S. crude oil inventories would increase by 7.58 million barrels in the week ending May 8, more than 4.15 million barrels expected, though still showing a moderating growth as shown on the chart above. The U.S. Energy Information Administration (EIA) will report official crude inventories later today (+4.32 million barrels expected).

From a technical point of view, WTI crude oil futures (June contract) maintains upside momentum as shown on the 1-hour chart. It keeps trading within a consolidation range after a recent rally. Nevertheless, it has already gone past the 61.8% Fibonacci retracement resistance level of the decline started on May 7. The level at $23.60 might be considered as the nearest support level, while the 1st and 2nd resistance are likely to be located at $26.75 and $28.20 respectively. Alternatively, a break below $23.60 would suggest that the next support at $22.60 may be threatened.

Source: TradingView, Gain Capital

More from Oil

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account