In the past five days, the price of crude oil has fallen sharply, by about 46 degrees, following traders’ fear that US production could lead to a surplus.
The price has fallen from its three-year high of $66.50 to a low of $58.05.
Yesterday, the price started to recover some of its lost losses after the EIA report showed that the buildup in the United States slowed. After the report, the prices rose by 2.4%, the highest daily change in years.
In the report, the crude oil inventories rose by 1.84 million barrels which was lower than what estimates expected. At the biggest pipeline hub, the inventories have continued to fall for eight weeks.
However, this is not unexpected if you consider past trends. At this time of the year, inventories tend to fall as oil refiners move to maintain their equipment.
The rise also came after positive reports from OPEC members. The secretary general was convinced that Russia would stick to them as they tried to stabilize the market after their failed manipulation.
Today, the price of WTI futures could see a minor correction. As shown below, the RSI is currently at 81, which is considered an extreme overbought situation. Therefore, as markets close positions in the positive area, it is likely that they may bring the price slightly down.