Crude Oil went down over 25% in the course of a few weeks bottoming on support level at 54.89. Plans to make significant cuts in supply over the fear of a continuing downward spiral are in question as Russia and Saudi Arabia watch market moves before taking any action. At a time when global demand is weakening and an overwhelming output from major Oil producers is surging, a further build up in today’s US Crude Oil inventory report will reverse the slight lift the price has made yesterday and exert more pressure on WTI crude Oil.
With an unquestionable downtrend on display, if a support level fails to be established at the recent low of 54.89, we can expect a relentless decline to further levels below. Price is currently ranging and may fall to support around 55.20 as it seems unlikely it will move into the dense Ichimoku cloud or break above the 50 moving average. Whether price ranges within the Ichimoku cloud or remains below the lower bound of it should add clarification to the direction of oil and the levels it should meet.
Support: 55.23 / 54.78
Resistance: 57.30 / 58.21