Crude oil prices eased this morning following a rally in the previous session after a surprise build in crude inventory reported by the American Petroleum Institute (API). The API data on Wednesday reported a build of 1 million barrels in US crude inventory for the week. Focus will now turn to inventory data reported by the Energy Information Administration (EIA) later today.
Concerns over oil production and exports from Iran and Venezuela continue as US economic sanctions on both of those countries could reduce world oil supplies. However, a possible output increase by the Organization of Petroleum Exporting Countries (OPEC) and non-OPEC members including Russia is possible with Saudi Arabia and Russia discussing a boost to output. Traders will be watching for development from the 174th OPEC meeting held in Vienna on 22 June but in the meantime oil prices are likely to remain sensitive to headlines.
On the weekly chart, WTI broke 66.70 which is the 50% retracement of the decline from March 2014 highs and found resistance at the 73.00 level identified in our previous report. A weekly close above 66.70 will confirm this level as support and could open the way for WTI to continue to trend towards the inverted head and shoulders target at 82.50 with resistance at 73.00 and then the 61.8% Fibonacci at 77.00. Any pull back should find support at 66.70 followed by 63.00.
On the daily chart, the pullback in WTI found support on a confluence of horizontal, trend line and Fibonacci at 66.20 and has recovered to trade above 67.20. A continuation to the upside is likely to encounter resistance at 69.40 followed by 70.60. A bearish reversal and break below 66.20 is needed for a deeper correction with support at 64.10 and 61.80.