WTI rebounds after larger crude drawdown

After falling sharply in the last few days, crude oil prices were trying to form support as WTI tested its technically-important 200-day average following the release of US oil inventories data. The data showed a larger-than-expected drawdown of 3.7 million barrels on the headline front. Stocks of oil products (gasoline and distillates) and crude inventories at Cushing all showed drawdowns too. In theory, oil prices should find some support on the back of these numbers. However, with global economic data remaining soft this week, demand concerns continue to hold back oil prices. So, a clear bullish signal is needed to encourage the bulls to step back in on oil.

If we see any distinct bullish reversal signals on WTI or Brent, then this would suggest that at least some buying could be on the way in the days ahead, as the previous selling pressure is potentially replaced by buying. Let’s see if that happens today.

By Fawad Razaqzada, market analyst at FOREX.com