WTI Technical and Fundamental analysis
According to the Energy Information Administration's report, U.S. crude oil inventories declined slightly more than estimates in the week ending May 21. Compared with1.05M decline expectations, crude Oil inventories fell 1.662M barrels last week.
Also, Distillate stockpiles that include diesel and heating oil fell 3.013M, more than 1.9M estimates.
The decline in the stock markets, ignoring these data and putting the Oil prices under pressure, while increasing in the support also expected to see by Iranian Oils, as Iran deal talks to the potential resumption of the 2015 Iran nuclear deal, is concluded going well according to the reports. The revived deal will cause more minor sanctions, especially in the oil industry, and it means more supply in the market.
For the next few days, the Oil price will depend on some factors, which I will point out one by one.
Firstly, today's US GDP data. GDP increase will cause positive sentiment for economic recovery, and it supposed to increase the demand. On the other hand, much better than expected develops, adding more pressure on FED to change the policies and decrease its asset purchasing. A less asset-supportive approach is expected to send the stock markets to deeper levels, which is harmful to the Oil market. So we have to wait and see the exact numbers and market reactions.
After first-quarter GDP numbers, tomorrow's PCE numbers are the key event of the week. In the past 12 months, core PCE inflation rose to 1.8%, while the FED target of 2% is the key measure to compare. Unexpected raise, significantly if today's GDP numbers also rise sharply, then the market will be pricing much more on less dovish policies or even determine the timetable to raise the rates from FOMC members.
And finally, Friday's late U.S. Baker Hughes Oil Rig Count. As it is rising in the past months from less than 200 to the current 356, more increase in the Oil Rig Count also means more supply as American producers getting more involved in the supply market. And decline under 350 will be supportive of oil prices.
Technical overview
WTI in the technical charts, declining. In the intraday charts, as well as the H4 chart, technical indicators have a downtrend shape. After a sharp decline and then correction above the critical level of $65.15, which is currently the first support as well, it is expected to cause another sharp decline, under this level to at least $64 (third support). We will see lower numbers in the Oil price if it can close the day under $64. On the flip side, first resistance at $66.30, higher numbers must be expected next week.
