Oil Price Analysis: WTI has retraced but there is a strong resistance just above $39.00

• WTI has moved 3.77% higher after the fall over the last few sessions.
• The move comes despite a demand growth cut from the EIA.

WTI 4-hour chart

On Wednesday, the U.S. Energy Information Administration (EIA) downgraded their 2020 global oil demand growth forecast by 210,000 barrels per day to 8.32 million barrels per day (bpd). In its monthly forecast, the EIA also cut its oil demand growth estimate for 2021 by 490,000 bpd to 6.53 million bpd. Despite this, there has been a decent rise in WTI prices.

Looking at the chart, the price has retraced somewhat since hitting a low of USD 36.43 per ounce on Tuesday and this could just be a "dead cat bounce" before the downtrend continues. If this theory is correct then the resistance zone of USD 39.10 per ounce could prove pivotal in the coming hours. 

Looking at the indicators, the MACD is giving mixed signals. The histogram is above the mid-point but the signal lines are under the zero level. The Relative Strength Index has moved away from oversold and could be heading towards the mid-zone. 

Overall, it does look like the trend is changing to the downside. This move up looks like a short term retracement and traders could be looking for resistance levels. Both the black and red horizontal lines look like they are strong but only time will tell which one will stop the bulls in the short-term.

Additional levels