WTI crude oil forms a strong bottom at $48 per barrel

Natural gas and crude oil prices get slammed by inventory data (Part 4 of 4)

(Continued from Part 3)

WTI crude oil settles at an important support level

West Texas Intermediate (or WTI) crude oil is showing the emergence of a multiple tops pattern. A strong dollar and bullish inventory data pushed crude oil down to the bottom of this pattern on February 26. As a result, this pattern has formed a strong support level at $48 per barrel.

Key support and resistance for crude oil

The next key support for WTI crude is forecast at $46 per barrel. Prices hit this mark multiple times in January 2015. On the other hand, bullish speculators could see resistance at $52 per barrel. The resistance has been established from the highs of February 5, 10, and 19.

In crude oil charts, the relative strength index (or RSI) is in oversold territory, suggesting prices could rise in the short term. The moving average convergence divergence (or MACD) last increased when it hit the current levels, suggesting prices could rise. On the other hand, a multiple tops pattern suggests prices could move sideways unless triggered by bullish or bearish news. Then the trend could change.

The dip in WTI crude oil prices negatively affects the margins of oil ETFs such as the United States Oil Fund (USO) and the PowerShares DB Oil Fund (DBO). It also affects the margins of oil producers like Anadarko Petroleum (APC), Exxon Mobil (XOM), and ConocoPhillips (COP).

Browse this series on Market Realist:

• Part 1 - Natural gas prices decline on bearish inventory data

• Part 2 - The UNG ETF declines more than 5% in a single day

• Part 3 - WTI crude oil crashes on a strong dollar and an inventory buildup