The price of WTI Crude Oil plunged on Thursday to hit a new monthly low of about $54.75 a day after the EIA report showed a major decline in US Crude Oil supply.
The price of Light Crude Oil has been on a downward trend since the start of the week falling from about $60.85 to the current level of about $55.50.
This pullback has led to a major breakout from an ascending channel that stretched back to the start of June. The decline began with the formation of what appears like a double-top reversal pattern over the last two weeks.
WTI Crude Oil Fundamentals Overview
From a fundamental perspective, the price of oil is trading at the back of positive data in terms of supply.
On Wednesday, crude oil prices attempted and failed to make a major rebound despite the release of EIA report that showed commercial crude oil inventories decreased by 3.1 million barrels. This was also the fifth straight weekly fall in US Crude Oil supplies.
However, despite the 3.1M fall, the figure did not meet expectations of a decline of 4.1 million barrels. This is probably why Oil prices continued to fall on Thursday to near 3-week lows.
The pressure on oil prices has also been compounded by uncertainty surrounding global economic growth with the US also beginning to show some fractures.
WTI Crude Oil Technical Analysis (the 60-min Chart)
From a technical viewpoint, the price of WTI Crude Oil is trading near the oversold zone in the Relative Strength Index Indicator. This shows that there is build up in bearish pressure amid weak fundamental data.
As such, the bears will be more optimistic going into Friday and probably next week and they could target profits at around $54.37 or lower at $53.32. On the other hand, the bulls will hope for a rebound towards $56.32 or higher at $57.35.
WTI Crude Oil Technical Analysis (the Daily Chart)
In the daily chart, the price of oil appears to be on a major pullback after failing to make a full recovery following the April-June plunge. This sets it out well for interesting trading opportunities.
The bears will target long-term profits at around the 23.40% Fib level at $54.37 or lower at $51.87 while the bulls will be looking high up at $56.82.
In summary, the price of WTI Crude Oil appears to be under intense bearish pressure but this does not eliminate trading opportunities for the bulls with rebounds expected in a cyclical pattern.