When a chart falls into a gap, that gap usually fills.
WTI crude oil has fallen into the weekly gap that opened on the chart on the surprise production cut from OPEC at the start of the month. WTI is down $2 to 78.85.
It's not entirely clear what is behind the decline but there are worries about global growth. Private data late yesterday from the API showed generally bullish numbers, though they were close to what was expected.
- Crude inventories -2675K
- Gasoline -1000K
- Distillates -1900K
That should have been supportive but there may have been selling the fact with these numbers increasingly leaked frontrun.
Up next are the official US numbers, which should include a scheduled 1.6 million barrel release from the SPR. The consensus is:
- Crude -1088K
- Gasoline -1267K
- Distillates -927K
I wouldn't pencil in the gap being completely filled until we see the data but lately oil hasn't been able to react to positive surprises. Early this week, China reported strong retail sales numbers and GDP but oil could barely muster a bid on the news.
However, over in the FX market, the US dollar is under some pressure and that should add some support for oil.
Technically, the bottom of the gap is at $73.77, which is where the bears will be targeting.