WTI Oil – Sharp Pullback Followed by Swift Rebound Signals Healthy Correction Before Renewed Upside Move
WTI oil prices dropped sharply on Thursday, sliding more than 3% to their lowest level in over a week, after an unexpected and substantial build in US crude inventories weighed heavily on market sentiment.
Data released on Wednesday revealed that US crude stocks surged by nearly 16 million barrels last week, far exceeding forecasts for a 1.8 million barrel increase and contrasting with the previous week’s 9 million barrel draw. The three-year high jump pointed to a marked slowdown in demand, while supply conditions remained broadly steady.
The retreat came after repeated failures to secure a decisive break above the key $66.23/$66.38 resistance zone, which includes the weekly Ichimoku cloud base and the 50% Fibonacci retracement of the $77.88/$54.87 decline. Attempts to extend gains were consistently capped by the top of the weekly cloud, limiting upside progress.
The slide reached $63.57, the lowest level since February 18, before a swift rebound of roughly $2 signaled that the decline may represent corrective positioning rather than a shift in trend.
This view is reinforced by the fact that Thursday’s dip found support just above the ascending trendline at $63.21 and near the rising 55-day moving average at $63.38, which recently formed a bullish crossover above the 200-day moving average. These technical factors support the interpretation of a healthy correction within a broader uptrend, keeping the larger bullish structure intact.
Daily technical indicators remain in positive territory, underpinning price action and aligning with persistent geopolitical risks, particularly concerns over potential escalation between the United States and Iran. Any intensification of tensions could trigger renewed upward pressure on oil prices.
Nevertheless, a sustained break above the $66.38 Fibonacci level and a clear move through the weekly cloud, which spans $66.23 to $67.23, are still required to confirm a bullish continuation signal.
Res: 66.38; 66.58; 67.23; 67.73
Sup: 65.04; 64.49; 63.57; 63.21
