Crude Oil Technical Forecast for January 25, 2017
Crude Oil Fundamental Analysis
Crude oil futures traded in a range on Tuesday, but with an upside bias. The market was supported by optimism over the OPEC/non-OPEC deal to cut output. According to data from the oil ministers of the participants in the program, output has been reduced by 1.5 million barrels per day of the 1.8 million barrel target.
Gains were capped on Tuesday, however, by the stronger U.S. Dollar and worries over increasing U.S. production.
U.S. March West Texas Intermediate Crude Oil closed at $53.18, up $0.43 or +0.82%. International March Brent Crude Oil finished at $55.44, up $0.21 or +0.38%.
Despite the growing optimism over compliance with the OPEC/non-OPEC deal to curb output, trim supply and stabilize prices, crude oil prices could feel downside pressure early Wednesday due to the release of a somewhat bearish inventories report from the American Petroleum Institute (API) late Tuesday.
According to the API, U.S. crude oil inventories increased by 2.93 million barrels during the week-ending January 20. Gasoline and distillate inventories also came in higher than expected.
The specifics of the report showed a 4.85 million barrel build in gasoline inventories and a 1.95 million barrel build in distillates. Inventories at the futures hub in Cushing, Oklahoma showed a decline of 145,000 barrels. Traders were looking for a drop of around 500,000 barrels.
Looking ahead to Wednesday, traders expect the weekly U.S. Energy Information Administration’s weekly inventories report to show an increase of 1.5 million barrels. Last week’s EIA report conflicted with the API report so you never know what to expect from the numbers. Therefore, you should prepare for volatility and a possible two-sided trade just in case the numbers come out on the opposite side of the spectrum once again.
Crude Oil Technical Forecast
Support 1: 52.72
Support 2: 52.25
Support 3: 51.83
Resistance 1: 53.61
Resistance 2: 54.03
Resistance 3: 54.50