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Crude Oil Prices Rebound on Inventory Data

Crude Oil Prices Rebound on Inventory Data

Walker England, Forex Trading Instructor

Talking Points:

Crude oil prices are rebounding from weekly lows, and are set to close just under$49.00 a barrel for Thursday’s trading. This rebound in price has been directly predicated on the U.S. Energy Information Administration (EIA) reporting that U.S. commercial crude inventories have decreased by a total of 6.42 million barrels last week. Traders should note that this reported decrease was significantly greater than the estimated decrease of 3.00 million barrels.

Technically despite today’s rally, crude oil prices still remain in a technical downtrend. Graphically prices remain trading beneath both the displayed 10 day EMA (exponential moving average) and 200 day MVA (simple moving average) which are displayed below. The 10 day EMA for crude oil is currently found at $49.57. This line is acting as a value of resistance in the short term, and if oil prices continue to rally traders may next look for price to challenge the 200 day MVA at $50.75. In the event that prices fail to rebound further, traders may look for crude oil to challenge yesterday’s low at $47.84. A breakout below this point would have significant bearish implications, and open up the price of crude to retest the standing yearly low at $43.97.

What’s next for crude oil and other commodities markets? Read our price forecast here.

Crude Oil Price Daily Chart & Averages

(Created Using IG Charts)

Why and how do we use IG Client Sentiment in trading? See our guide.

Sentiment figures for crude oil prices (Ticker: US Crude) remain net-long, with IG Client Sentiment reading at +1.78. This value indicates that 64.1% of traders are currently net-long crude oil. When read as a contrarian indicator, this reading suggests that crude oil prices may continue to decline further. If prices do begin to trend downward, traders should look for sentiment figures to reach an extreme reading of +2.00 or more. Alternatively if crude prices continue to rally, traders may look for sentiment figures to move back towards more neutral values before eventually flipping negative.

--- Written by Walker, Analyst for

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.