FxWirePro -Crude Oil Trade Idea

Crude oil prices are consolidating after a massive sell-off. It hit a low of $66.71 yesterday and currently trading around $68.36.

The latest report from the American Petroleum Institute (API) shows that U.S. crude oil inventories unexpectedly fell by 0.777 million barrels for the week ending November 8, 2024. This decline comes after a big increase of 3.132 million barrels the week before, indicating a change in how much oil is stored.

Key Highlights:

• Crude Oil Inventory Change: Decreased by 0.777 million barrels.
   
• Previous Week's Change: Increased by 3.132 million barrels.
   
• Market Expectations: Analysts had expected inventory levels to go up, so this drop was surprising.

After his recent election victory, Donald Trump has promised to significantly boost U.S. crude oil production. He plans to make it easier for companies to get drilling permits, reduce regulations, and improve energy infrastructure. Trump aims to lower energy prices by increasing domestic oil and gas output, insisting, "We will frack, frack, frack and drill, baby, drill." While some analysts believe his policies could raise production in the short term, they are concerned that global market factors could keep prices low. Additionally, some experts warn that increased U.S. production might lead to oversupply and lower prices, which could hurt producers.

The US dollar index remains bullish, as does the US treasury yield, which is generally negative for commodities. Major resistance is at $69.55; breaching this level could push prices up to $70.59/$71.45/$72.60. significant trend reversal would only occur if prices rise above $73.

Near-term support is around $69.70; if this level is broken, targets could drop to $68.70/$68.45, $67, or $66. According to the 4-hour chart indicators, the ADX is bearish and the CCI is neutral at 50.

It may be wise to consider selling on rallies between $71.50 and $71.55, with a stop loss set at around $72.50 and a take-profit target of $67.