WTI (NYMEX futures) is consolidating near four-day highs of $79.02, as traders assess the implications of a likely release of oil supplies from the US, China and Japan’s strategic reserves.
Meanwhile, the bulls turn cautious ahead of a flurry of critical US economic releases, including the Durable Goods and GDP. Oil traders will also watch out for the weekly US crude inventories data from the Energy Information Administration (EIA).
From a short-term technical perspective, WTI is battling the 50-Daily Moving Average (DMA) resistance at $78.65, as the buyers look to find a strong foothold above the latter on a daily closing basis.
With the 14-day Relative Strength Index (RSI), however, trading listlessly below the midline, the bulls are likely to lack the follow-through upside.
If sellers return at higher levels, then WTI could drop back towards the $78 threshold, below which Monday’s high of $77.01 could be probed.
Deeper declines in the US oil will likely call for a test of November 18 lows of $76.36.
Alternatively, a sustained move above the 50-DMA hurdle will expose the mildly bearish 21-DMA resistance at $79.96.
Should the upside momentum sustain then WTI bulls could lookout for the next resistance at $80.50.
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