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Commodities Brief: Oil shrugs off weak economic data, closes up +2.33%

FXstreet.com (Barcelona) -Crude Oil WTI closed up +2.33% on the day to finish at 91.63. The move impressed some analysts as the commodity has appeared to shrug off weak economic data (China HSBC PMI, German PMI, German IFO, etc) released earlier in the week. The main catalysts which seemed to spark the move higher were the EIA figures released during the New York session. The data showed a 0.947M barrel increase in oil supplies over the past week which was less 1.800m expected. Additionally, Gasoline inventories fell 3.93 million barrels while distillate inventories rose 97,000 barrels.

“It appears as though declines in US stocks of gasoline have provided support to the oil market today but the move higher has been slowed a little by the prospect of slower global growth,” noted Kyle Shortland of Forexlive

From a technical perspective, looking at both the short term and long term developments helps to get some feel for what occurred today. Looking at the 1 hour chart, it’s apparent a number of buy stops were most likely triggered after 90.00 was breached during the New York session. This was shortly after the EIA inventory released discussed above. This was the upper boundary of a substantial consolidation base which had been forming over the last 10 days, and has a measured move target up near 94.20

The longer term technical perspective is also interesting, as the weekly pennant pattern which was confirmed last week on a close below 89.80 is now in jeopardy of being a failed pattern or “bear trap”. A weekly close above 92.00 would officially negate the pattern which had measured move targets all the way down towards $70.00. Often, when a pattern of this magnitude in length (11 months) fails it leads to a sharp move in the opposite direction.

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