Rally’s Fate Could Hang On EIA Inventory Data Next Week

Despite the previous week’s potentially bearish chart pattern, July Crude Oil futures managed to trade higher most of the week. The key number which held as support was the previous week’s low at $59.09. A trade through this level would have confirmed the top at $63.62. This would have set into motion a potential correction into $55.54 to $53.63. 

Last week’s inside move suggests trader indecision. However, it also indicates impending volatility. While the previous week’s move may be indicating the emergence of potentially bearish fundamental news, last week’s inability to follow-through to the upside or downside suggests that investors may be waiting for more information about the supply and demand conditions before choosing a direction.

On May 6, July Crude oil reached a top at $63.62 before breaking for two days into $59.09. The news of the first inventory drawdown since November may have fueled the surge into the high, but it was the higher-than-expected gasoline inventory figures that triggered the sell-off.

The news was bearish enough to cause a short-term break, but it was not enough to trigger the near-term correction that many investors have been anticipating. This indicates that investors are waiting for further direction from the fundamentals.

On May 13, traders received more conflicting inventory data which held the market in check for another day. According to the U.S. Energy Information Administration,…