WTI Oil - 23.6% fib hurdle intact despite drop in US inventories

WTI oil faded spiked above $48.94 (23.6% Fib retracement of $55-$47.07) on Thursday and remains below the key fib hurdle despite the drop in the US oil stockpiles. 

The US Energy Information Administration said on Wednesday that crude inventories fell last week, the first decline after nine weeks of increases. Inventories fell by 237,000 barrels in the week to March 10, compared with analysts' expectations for an increase of 3.7 million barrels.

Meanwhile, data from market intelligence firm Genscape showed a build of more than 2 million barrels in the week to March 14 at the Cushing, Oklahoma delivery point. The failure at the 23.6% Fib is even more surprising if we take into account the fact that Saudi Arabia is ready to extend the output cut deal if inventories remain above average. Furthermore, the dollar traded weak as well following the Fed decision on Wednesday. 

The front month futures were last seen trading around $48.85/barrel. Oil traders await the US Baker Hughes rig count data release. 

WTI Oil Technical Levels

A break above $48.94 (23.6% fib) would open doors for $49.59 (previous day’s high). On the other side, support is seen at $47.94 (Mar 13 low), which, if breached would expose $47.07 (Mar 14 low).