Crude oil price is likely to dip as the US is moving towards releasing 50 million barrels from its national strategic reserve.
The WTI crude reversed from its record high of $84.97 per barrel on November 10, to around $78 per barrel as of Wednesday. WTI on Tuesday fell to $75 per barrel – a record low since October 10.
Tuesday’s fall was linked to talks that the US, Japan and India would release crude reserves to tame prices despite the threat of faltering demand as Covid-19 cases flare up in Europe, CNBC reported on Tuesday.
“The United States is expected to announce a loan of crude oil from its emergency stockpile on Tuesday as part of a plan it hashed out with major Asian energy consumers to lower energy prices...,” said CNBC.
However, Oilprice.com on Tuesday: “Oil prices erased losses and jumped on Tuesday morning following the announcement from the US Administration that it would make available 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) to lower said oil prices.
“The headline for the oil market on Tuesday morning was the announcement of US President Joe Biden that the Department of Energy would release 50 million barrels of oil from the SPR in a bid to lower high gasoline prices in a coordinated effort with other major oil-consuming nations.
“Despite the seemingly big number, 50 million barrels, the US release actually equals around two and a half days of American petroleum consumption, which was at 20.5 million barrels per day in the pre-pandemic 2019.”
For technical analysis, oil price is creating a short-term down trend and long-term uptrend. However, investors can see signals of reversing back to $65 per barrel based on strong support at $65 per barrel.
Moreover,other indicators such as Fibonacci and MACD are also indicating short-term reversing to $65 per barrel. Therefore, for this week’s trading recommendation, investors should consider selling crude oil at $78 per barrel, setting a take-profit function at $66 per barrel and a stop-loss at $86 per barrel.