WTI: Price consolidates in cup and handle formation, holding above rising daily pivot point
- Oil prices are under pressure, but retain a bullish bias on a techncial basis.
- Recent data has shown a weekly climb in U.S. crude production while concerns over a slowdown in energy demand from China simmers away on the backburners.
- WTI is currently trading at 52.32, up from a low of 51.28 and below the 52.66, mostly in the consolidation of the late 2018 correction.
WTI drifts sideways as January business moves along, initially fuelled by production cuts that kicked in at the start of the year, lifting prices out of bearish territory. A monthly report from the Organization of the Petroleum Exporting Countries has proven that its oil production has dropped for December by 751,000 barrels a day to 31.6 million barrels a day in December.
Fears over slowing demand from China keeps lid on rallies
However, yesterday, the Energy Information Administration reported a bigger-than-expected fall in crude inventories of 2.7 million barrels for the week ended Jan. 11 and the report also showed that weekly domestic production climbed by 200,000 barrels to 11.9 million barrels a day. Markets are still concerned about supply and the fears over slowing demand from China keeps a lid on outright optimism and the upside.
The weekly bearish hammer should also be a warning to bulls, from a technical perspective while monitoring how the daily cup and handle plays out. However, MACD and RSI are positive on a daily and 4hr time frame and the price remains above the rising daily pivot point at 52.27. The price is also still above the 23.6% fibo retracement around 50.50. However, a break there should encourage additional speculative shorts as the bulls step aside where the psychological 50 figure and then 48.20 as a key confluence support area come into play. Bulls can aim for a run to the 38.2% Fibo of the Oct 2018 decline in the 55.50s.