WTI crude oil is retesting the 80.00 psychological level!
February has been a good month so far for the crude oil benchmark, as it bounced from the 73.00 support to trade closer its current levels near 80.00.
Last week, the commodity found support from China’s reopening prospects, supply concerns after an earthquake in Turkey, and Russia announcing its plans to cut about 5% of its oil production.
But that was ages ago!
WTI Crude Oil (USOIL) 4-hour Chart by TradingView
The U.S. just announced its plans to release (sell) 26 million barrels of oil from the Strategic Petroleum Reserve (SPR), a move that could drag reserve to its lowest level since 1983.
The announcement was a surprise for energy traders who were betting on the DOE canceling the sale. It also made it easier for WTI to turn lower from the 80.00 mark.
Will 80.00 hold as resistance? Or will the bullish momentum push WTI to higher technical resistance levels before more sellers step in?
On a technical basis, WTI crude is trading just below a range resistance zone that hasn’t been invalidated since mid-November.
Stochastic also favors more selling as it shows a lowkey bearish divergence with price’s higher highs.
Today’s U.S. CPI release may give us more clues on WTI crude’s next direction.
Markets see the annual inflation rate decelerating from 6.5% to 6.2% in January. If the rest of the numbers support a slowdown, then more traders can price in a Fed pivot despite a persistently strong labor market.
A risk-friendly trading environment can take WTI crude back to the 80.70 previous high if not the 82.50 range resistance zone.
But if this week’s closely-watched news releases support more Fed rate hikes, or if they encourage risk aversion in the markets, then 80.00 could hold as resistance and drag WTI down to the 78.00 mid-range levels.
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