Global macro overview for 17/05/2017:
The latest weekly American Petroleum Institute (API) inventory data were better than expected. For the week ending May 12th, API reported a build of 880k barrels, while the market participants expected another draw of 2,000k barrels, following the substantial draw of 5,790k barrels reported last week. As we remember from earlier this week, Iran stated a willingness to support the extension of the oil production cuts if the other members of OPEC organization will agree to extend cuts as well. For now, the recent joint announcement by Russia and Saudi Arabia about a nine-month extension of the OPEC production has helped the crude oil to rally higher, but any build up in inventories might again push the prices below the $50 level. The next important data are scheduled at 04:30 pm GMT today and it will be the EIA Crude Oil stockpiles report. If the EIA data also reports a build for the week, there will be an underlying dip in confidence surrounding falling inventories.
Let's now take a look at the Crude Oil technical picture on the H4 timeframe. The price dipped slightly below the $48.24 support, but rebounded quickly and now it is trading above this level. Nevertheless, the momentum indicator still points to the downside and if the stockpiles will be bigger than anticipated, then the market might test another technical support at the level of $47.31. Only a sustained breakout above the 61$Fibo at the level of $49.93 will change to immediate outlook from bearish to bullish.
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