- EIA reported inventories rose by 12 million barrels last week
- Volatility remains amid uncertainty
- Inverse head and shoulders forms
Oil prices remain very volatile and last week’s unexpected and substantial inventory build, reported by EIA, further added to that.
The price fell sharply after the data and continued earlier today before recouping those losses to trade flat on the session.
It’s understandable why oil prices are so volatile, there’s tremendous uncertainty around the Middle East, the economy, and interest rates which is generating these large moves.
There has been more of an upside bias of late but broadly speaking the price remains at reasonable levels that won’t be a concern from an inflationary standpoint.
Inverse Head and Shoulders Formed?
Brent crude has been gradually recovering since mid-December and appears to have formed an inverse head and shoulders in the process.
Source – OANDA
The neckline falls around $84 and hasn’t been broken so the formation is still incomplete. A break of it though could be very bullish and may offer possible price projections based on the size of the inverse head and shoulders formation.
Of course, nothing is guaranteed but it’s clear that $84 is a significant resistance level and one that’s been reinforced multiple times. The higher lows since mid-December also suggest bullish momentum is gradually building.