Oil Price Set For Breakout After US Inventories Data
Crude oil price, news and analysis:
- The price of US crude oil slipped back after a report that US inventories surged in the week to October 11.
- Official data due later this session could prompt a breakout in the price from a triangle chart pattern.
Oil price set for breakout
The price of US crude oil has eased after data showing that US crude inventories soared by 10.5 million barrels to 432.5 million in the week to October 11. Analysts had expected the American Petroleum Institute’s weekly report to show an increase of just 2.8 million.
Now, traders will be watching carefully to see whether official figures from the Energy Information Administration, due later Thursday, paint a similar picture. The consensus forecast is for a rise of 2.88 million barrels but the API numbers suggest that a larger rise is possible.
Crude Oil Price Chart, Four-Hour Timeframe (September 5 – October 17, 2019)
Chart by IG (You can click on it for a larger image)
As the chart above shows, the price of US oil has been falling within a triangle pattern for the past month and, after a period of relative stability, it is possible that the EIA report will prompt a breakout from that pattern, although it is not clear in which direction. Note too that volume has been falling for the past few days, also suggesting a break.
Unfortunately, it is not clear in which direction that will be, which is why the numbers could be important – with a larger than expected increase likely to prompt a price fall and a smaller than expected increase a rise. Caution is therefore called for as a move in either direction could be sharp.
To the upside a move to the $54.96/barrel high touched on October 11 is possible, while on the downside a drop to the $51.41 low touched on October 9 could be the target.
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--- Written by Martin Essex, Analyst and Editor
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.