FxWirePro short term outlook: WTI likely to extend decline towards $35

In our previous post, published a day before the UK referendum we suggested a tough fight between the bulls and the bears over the fate of WTI. If you can’t recall the post named, “WTI at critical juncture as bulls fight for $60 and bears for $40”, the post is available here, http://www.econotimes.com/WTI-at-critical-juncture-as-bulls-fight-for-$60-and-bears-for-$40-225206

Now, thanks to the referendum going against staying in the European Union, oil bears were provided with an added edge over the bulls with regard to risk aversion. Still, the bulls were able to hold off the bears with a hope that inventories would start declining faster in the United States, bringing the market closer to balance.

However, last night report from Energy Information Administration (EIA) in the United States broke that resolve when it showed a much smaller decline of 2.22 million barrels than originally anticipated. With the key support of the bulls taken out last night, we expect the bears to first push the prices towards $40 as recommended earlier.

However, assessing the bear’s additional advantage of risk aversion we would like to extend that target to $35-36 per barrel area.