WTI fell over 5%! What's next on the oil market?

Oil marks a downward day after Saudi Arabia confirms and pledges to fully cover US sanctions against Iran by opening all of its available extraction facilities.

At the moment, minutes before the release of US oil inventories, black gold traded more than 5% lower than yesterday.

As expected, US stocks will surge by another 3.7m. barrels, which will further reduce the price of oil.

What to expect in the medium term?

Technically, the price is in a key area of ​​support that, if overcome, sells will increase significantly. But the news that led to today's collapse is not new at all, and this suggests that almost everything that will influence once it is fact is already accumulated in it. From the point of view of the foundations, there will be no new oil on the market, and the world economy remains fairly stable. search is retained. This suggests that the technical support area will most likely last, and that's where the bulls will be looking for appropriate long positioning signals. If it does not last, as a result of higher oil reserves in the US, I expect a test at around $63 a barrel.

The support zone is formed by a basic ascending diagonal, internal diagonal, horizontal and 200SMA. After the better data from the API report on oil reserves, the probability of the price testing the levels of about $63 a barrel has increased significantly. This, in turn, would "push" the price into a longer-term consolidation between $63 and $73. In the long run, if the price goes below $63 a barrel, I expect sales to rise and take the price close to the $59/60 barrel area. There is also% 50 Fibonacci correction of the main trend and the main trend line of the long-term upward movement.

Charts: Used with permission from Bloomberg Finance L.P.

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