The US Crude Oil Futures (NYMEX: CL) had a turbulent trading session on Wednesday as investors were bombarded with several economic updates that fluctuated the sentiment around the commodity. However, the futures steadied in the morning trading session on Thursday after the gains from the surprisingly large declines in the US crude inventory were offset by the smaller-than-expected cut in oil supply by the Russian Federation. The futures were supported by the Energy Information Administration report that US crude inventories declined by 7.5 million barrels from the previous week.

The upside was capped by several indicators that weighed down the futures during the previous day’s trading session. The lower-than-target supply cut from Russia and the lowered oil export demand from Iraqi Kurdistan helped curb the recent futures upside. During Wednesday’s trading session, the strong US dollar and the concerns of slowing economic demand also weighed on the commodity futures.

Technical

The easing of the fears surrounding the banking industry has been a heaven-sent for the black gold futures as they continued to soar higher within an ascending trend channel. The price action recently pulled back from a 12-day high, but the bulls could find support in that the price action is still trading comfortably above the 50-day moving average.

The bears could be looking to the prevalent market condition for a possible extension of the pullback with a breakthrough below the 23.60% Fibonacci level confirmation of the short-term bearish momentum. Thus a break through the Fibonacci could bring the $71.53/barrel (/BLL) support level into play, a level of significance for the bears. A sustained break through the initial support level could expose the 50-day average and the support level of $69.89/BLL to the bears’ rally.

The bulls could expect the seasonal demand for black gold to entice the buyers in the short term. The bulls could look to the key resistance level at $74.33/BLL as a possible level of interest. If the bulls could sustain the break above the initial resistance level, then the bulls could confidently look to test the resistance level of $75.62/BLL.

Summary

With the future prices seemingly creating a bear flag pattern from the last trading session, investors could expect the price action to continue its rout downward in the short term. Thus, a short-term trading opportunity could exist as the futures break below the $71.53/barrel (/BLL) support level with the support level of $69.89/BLL firmly in sight.

Sources: TradingView, CNBC, Investing.com.

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