Oil markets gradually climbed to the upside yesterday, on improved risk sentiment after reports of a planned trade meeting between the US and China and word from U.S. Central Command which said the United States might have taken down a second Iranian drone. Both events triggered a sizable short-covering rally after the markets have been struggling under the weight of a trade war. Looking ahead, traders will look to the EIA report tomorrow for direction, as indications of another buildup in inventory will likely cause the markets to pullback to some degree.
After finding buyers around $55 crude oil moved higher for the third day in a row pushing through Monday's high and forming a bullish engulfing candle, however, failed to break the 50-Day moving average and key resistance level at $57.30 (R1). The RSI on the hourly chart looks mixed to bearish, therefore a slight pullback to the $56.48 support level (S1) is a highly likely scenario for the short-term.
Support: 56.48 / 55.00
Resistance: 57.30/ 58.25