Yesterday's session was extremely cruel to bulls in crude oil as the price of WTI Crude Oil dived from $58.83 per barrel to the level of $55.64. The decrease was 6.10%. From the top of the beginning of October, there were drops of 27.50% despite the declarations of OPEC members to reduce production do not help.
Where does the low price of black gold come from? Trump surprised the markets and allowed eight of its trading partners to continue to buy oil from Iran despite the US sanctions. In addition, the American president is lobbying for a lower oil price.
Moreover, the supply is at the highest level for a year. OPEC countries, after increasing production in September, deliver 32.78 million barrels a day. In addition, there is a high level of production in the USA itself. It increased by 400,000 barrels a day to 116 million. This is a record result for the largest economy in the world. In addition, crude oil inventories are larger than usual, which is due to production expectations. In previous years, in the autumn and winter months, supply was at a lower level than it is this year. All this contributes to a sharp drop in the WTI and Brent oil prices.
Let's now take a look at the Crude Oil technical picture at the H4 time frame. The market has made a local low at the level of $55.64 in extremely oversold conditions at this time frame. This is an important technical support zone between the levels of $55.79 - $56.78 and any breakout below this zone will only make the bears stronger and more confident. The nearest techcnical resistance for bulls is seen at the level of $58.06.
