WTI turns away from key resistance towards 62 handle on crude inventories build

• WTI bulls capitulating below 61.8% Fibo.
• Energy Information Administration said crude inventories added 7.2 million barrels to 449.5 million. 

Crude oil has been chipping away on the upside above the 200-DMA with bullish supply-side dynamics propels the black gold forward, coupled with the recent recovery in risk appetite. However, in a choppy session on Wednesday, so far, the price of a barrel of West Texas Intermediate crude has started to slide and has dropped by almost a buck, travelling from $62.96 to a low of $62.07. 

Data provided by the Energy Information Administration said crude inventories added 7.2 million barrels to 449.5 million barrels in the week ended March 29, leaving them at the five-year average, this followed the American Petroleum Institute's late Tuesday report of a 3 million barrel rise in inventories. 

However, the latest estimates of OPEC production showing a 295k bpd decline in March, bringing the cartel's production to the lowest level since 2015 as noted by analysts at TD Securities:

"With these cuts starting to be felt in the US market, we could very well see WTI prices overshoot toward $64/bbl in the medium term. Meanwhile, as the May deadline for the renewal Iran sanction waivers approaches, rhetoric surrounding getting Iranian exports to 0 has started to grow. While we expect waivers will be extended, the allowable amount could potentially be reduced as special U.S. envoy for Iran Brian Hook has recently stated, "There are better market conditions for us to accelerate our path to zero". That being said, we continue to expect little flow from CTAs as momentum remains embedded to the downside, despite the whopping recovery in Q1."

WTI levels

Daily stochastics are overbought and 4HR momentum has flipped to the downside with the price unable to get over the line, being the 63 handle with the 61.8% Fibo as a key target in the 63.70s, meeting Jan 2018 support. On the downside, $57.80 is a key level on a sustained correction and a break there would opens the case for a continuation of the bear trend that would target below the $42 handle and late Dec lows. However, if the area between 61.90 holds, 2018 April's solid lows and the 200-D SMA, bulls can look to retarget the 61.8% Fibo.