Oil market: upside momentum is fading

OANDA:BCOUSD   Brent Crude Oil
Crude oil prices rose marginally on Tuesday, with Brent made a false break above the $67 handle. After reaching fresh three-week highs around $67. 40 , prices retreated and settled below $67. Today, the barrel is clinging to the psychological resistance, showing signs of a fading momentum.

The API reported that US crude stockpiles fell by 2.6 million barrels for the week ended March 8, while that gasoline supplies dropped by 5.8 million barrels. Traders cheered the data but the overall reaction was subdued as investor sentiment in the global financial markets has deteriorated after UK Prime Minister’s revised Brexit deal was rejected in Parliament, increasing the odds of a ‘no-deal’ divorce.

Despite the prices are rising for a third day in a row, the bullish momentum seems to be fading now, which could be a warning sign for buyers. Should the official report by the EIA come worse than API’s estimates, Brent could face some profit taking. Only a clear break above $67 will brighten the short-term technical outlook.