Sounds crazy, right? But from time to time crazy is something that does indeed take place, and these are the times when the prepared are much more profitable than those who were caught with their guard down. There is one analogy that points to the possibility of seeing such a big move in the price of crude oil. What if?

Yesterday, the U.S. Energy Information Administration showed that crude oil inventories rose less than analysts had forecast. Was that a bullish news? In our opinion, absolutely not, because it was the second-straight weekly build in crude stockpiles, which together with rising U.S. production (which reached 10.37 million bpd last week) doesn’t bode well for higher prices of black gold.

Why? If American drillers will continue their activity, the U.S. will replace Russia as the world’s top oil producer. Such situation will likely put pressure on the producers (which have been cutting output due to the earlier agreement in previous months), increasing the risk that they would lose shares in the oil market. What could be the implications of such a development? In our opinion, such an environment will be very unfavorable to oil bulls and they could have problems keeping the price not only above $60, but also above the psychological barrier of $50.

Does it mean that another crude oil’s price war is just around the corner? It’s hard to predict – especially as we do not have a crystal ball that would give us a clear answer to this question. Nevertheless, we have charts, which can whisper something interesting about the future of black gold. So, let’s jump into the technical picture of the commodity.

Good Evening, Oil Traders

In the previous alerts we wrote that even though the price of crude oil moved higher, it was unlikely that a bigger upswing would follow due to the red resistance zone. This zone was (and still is) based not only on the late-February high, but also on the 61.8% Fibonacci retracement level.