• WTI oil reversal from $84.95 extends below $82.00
• Higher US stocks, Iran cools off oil rally.
• WTI testing important support at $80.80.

Front-month WTI prices have picked up from day lows below $81.00, returning above $82.00 after having hit two-week lows below $81.00 earlier on Thursday.

Oil rally falters on US Stocks and nuclear talks with Iran

Crude prices have retreated about 3% over the last two days, weighed by an unexpected increase in stocks reported by the US Energy Information Administration on Wednesday. According to the EIA, commercial oil inventories increased by 4.3 million barrels last week, beating expectations of a 1.91 million barrel increase and easing fears about an energy crunch this winter.

Furthermore, rumors suggesting that Iran is ready to resume nuclear talks with the US and other global powers, which had been suspended before the Iranian elections, have contributed to cooling off oil’s rally. A tweet by one of Iran’s top negotiators, Al Bagheri Khani, stating that the Iranian authorities would agree to “start negotiations before the end of November” has boosted expectations of Iranian crude returning to the markets, which might have prompted some investors to close long positions.

Finally, Russian President Vladimir Putin assured that he is ready to start increasing gas supplies to Europe once Russian storages are full or, in any case, by November 8. This has triggered declines in gas prices, weighing further on oil futures.  

WTI crude, testing an important support level at $80.60/70

WTI prices have picked up from session lows at $80.15 to return to the mid-range of $81.00 at the moment of writing. Oil futures, however, remain dangerously close to an important support level at $80.60/70, where the uptrend resistance line from late-August lows meets October 20 and 21 lows.

With technical indicators starting to point lower on daily and hourly charts, a confirmation below here might increase bearish pressure, sending prices towards $80.00 psychological level and October 13 low at 78.90.

On the upside, immediate resistance lies at intra-day highs, $82.15 and above here, October 27 high at 84.00 ahead of the $84.95 multi-year high.

WTI daily chart 

Technical levels to watch