The update from the Energy Information Administration (EIA) showed crude inventories increasing 594K in the week ending April 16 versus forecasts for a 2.975M contraction, and it remains to be seen of OPEC+ will respond to the recent rise in US stockpiles as the group plans to “assess market conditions and decide on production level adjustments for the following month, with every adjustment being no more than 0.5 mb/d.”To get more news about WikiFX, you can visit wikifx.com official website.
However, separate figures from the EIA showed weekly field production holding steady at 11,000K for the second week, and the weakness in US output may keep oil prices afloat as OPECs most recent Monthly Oil Market Report (MOMR)emphasizes that “oil demand in the 2H21 is projected to be positively impacted by a stronger economic rebound than assumed last month.”
With that said, the decline from the March high ($67.98) may turn out to be a correction in the broader trend rather than a change in market behavior as US crude production remains below pre-pandemic levels, and recent developments in the Relative Strength Index (RSI) instill a constructive outlook for the price of oil as the indicator breaks out of the downward trend from earlier this year.Keep in mind, crude broke out of the range bound price action from the third quarter of 2020 following the failed attempt to close below the Fibonacci overlap around $34.80 (61.8% expansion) to $35.90 (50% retracement), with the price of oil taking out the 2019 high ($66.60)as both the 50-Day SMA ($61.54) and 200-Day SMA($48.18)still reflect a positive slope.
· At the same time, recent developments in the Relative Strength Index (RSI) suggest the decline from the March high ($67.98) may turn out to be a correction in the broader trend rather than a change in market behavior as the indicator breaks out of the downward trend from this year.
· However, the price of oil bounces along the 50-Day SMA ($61.55) as it fails to retain the upward trend from November, and crude may continue to track the March range as it struggles to push back above the $64.20 (61.8% expansion) region.
· In turn, a close below $61.80 (50% expansion) may push the price of oil towards the $59.40 (38.2% expansion) region, with the next area of interest coming in around $58.00 (50% expansion) to $58.40 (23.6% expansion).