Oil dropped by the most in more than three weeks, around 1.52 percent to close at $61.367 per barrel, in context of rallying equities and an expansion of crude stockpiles and production showed by a U.S. government report.
Downside trend in equity market, a rising dollar and angst that Trump’s tariff threats will spark a trade war acted as a downward force on crude oil. Meanwhile, a U.S. rising crude output also acts as a potential downward force on oil prices. The Energy Information Administration said American crude inventories rose by 2.41 million barrels last week, while production jumped to a fresh record.
In face of further U.S. crude output growth, OPEC Secretary General Mohammad Barkindo showed no worry about it, saying that he is optimistic on robust demand supported.
Take a look at the daily chart on the WTI. After a breakout of 38.2% retracement (61.944), it is facing two significant supports around this level, which would May 6 2015’s high of 61.555 and Fibo 50% retracement respectively. As you can see on the chart, if the price is holding its momentum it’s going to break through the cloud created by Ichimoku, triggering further drops in the near future.
Chart 1: WTICOUSD Daily
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