WTI testing $49 barrier amid Al-Falih comments

WTI crude oil started to erase its daily losses after being supported at $48.50 but couldn't gather enough momentum to break above $49 yet. At the time of writing, WTI was trading 0.27% lower on the day around $48.75.

Oil's recent rally was fuelled by the weak greenback and the decline seen in the U.S. crude inventories. However, the most recent IEA monthly report showed that the global oil inventories rose for the first time in six months in January, despite the OPEC agreement, highlighting once again the acceleration in the U.S. production.

Khalid A. Al-Falih, Minister of Energy, Industry and Mineral Resources of Saudi Arabia said that they will review their oil strategy in mid 2nd quarter and that oil cuts may be extended if necessary, helping the crude oil find support.

Al-Falih: Oil cuts may be extended if necessary

Slobodan Drvenica, Information & Analysis Manager at Windsor Brokers Ltd., in a recent report, said oil price extended bounce from Tuesday's spike low at $47.08, boosted by weaker dollar and fall in US crude inventories. Recovery extended for the third consecutive day and peaked at $49.61, threatening key barrier at $50.00 (daily cloud base/psychological resistance), after closing above another important point, 200 SMA at $48.70 on Wednesday.

However, risk of recovery stall persists, as daily studies are still bearish and concerns of global oversupply keep oil price under pressure. Stall of recovery rally (also fourth wave of five-wave cycle from $55.01) under $50.00 barrier would generate bearish signal and commence the fifth wave, which could travel back to $47.08 low. Today's close below 200SMA would be seen as negative signal that may trigger fresh acceleration lower.

Res: 49.00; 49.61; 50.00; 50.43

Sup: 48.55; 48.05; 47.68; 47.08