WTI Crude climbed strongly yesterday despite the latest Department of Energy report reflecting a much higher than expected build up in crude inventories. Prices pushed lower immediately when the report was released at 10.30am EST, falling from a high of 100.6 to 100.18. Prices did rebound higher in the subsequent 30 minutes, staying above the 100.2 support but eventually fell to a low of 99.96 in the following 30 minutes.
Hourly Chart
This should have been the opportunity for bears to seize the initiative. Momentum was bullish before the data release with the price rebounding off the rising trendline and avoiding a bearish breakout of 99.6. The timing of the decline was also perfect - US stocks were descending, adding risk off bearish pressure. Furthermore, the turnaround at 100.6 would have made it the 4th consecutive lower high since last Friday, and that is yet another bearish technical sign for traders to take advantage of.
Hence, this failure of bears to "seize the day" is a huge testament to bullish strength, and the move to 100.93 is a reflection of this bullishness. Nonetheless, given that there is nothing fundamental supporting this bullish push, it is not surprising to see that prices failed to tag 101.0 significant resistance. The question that we need to ask is whether bulls have given it their last hurrah. Given that prices did not really push up higher during Asian hours despite a strong bullish recovery in risk appetite during the afternoon, suggests that the underlying bullish sentiment has waned. As such, a move back to the rising trendline should not be difficult, especially since European stocks appear to be mildly bearish.
Technicals concur, with 100.6 supportbroken and Stochastic readings showing a sharp bearish cycle. If price manages to break the rising trendline with ease, a push to the 100.0 round figure will be possible, and the likelihood of stronger bearish reprisal becomes greater as it is unlikely that there will be many bulls left after yesterday's significant push.