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Crude Oil: Rose following the cautious outlook from the FOMC

Crude prices initially fell after domestic inventories hit record highs for a 10th week, however the market seemed to be holding out from making new lows on bets the US central bank may hint at a sooner-than-later rate hike.

Back in November, a major catalyst for the major breakdown in oil prices was OPEC’s decision not to cut oil production, a decision that has also led to oversupply of the market. Now Crude oil is moving toward the OPEC last meeting target price of $40 per barrel.

Yesterday the U.S Energy Information Administration (EIA) released its latest survey. The report was expected to show a decrease in crude oil stocks with estimates at 4.000 million barrels but the actual was worse than expected rising to 9.622 million barrels.

Crude oil price initially fell but found enough buying pressure at Tuesdays low to turn things back around and close near the high of the day. The commodity is in a bearish phase and made a bullish engulfing pattern. The stochastic is showing an oversold market but even with the commodity well into oversold territory, we should expect a pullback before another downward leg.

Expecting upward move to a daily key level at 47.92 on a break above the daily resistance at 46.08 (scenario 1).

LCrude is a CFD written over Light Crude futures.