Crude prices continued to fall on Thursday, further distancing from the two-month high touched earlier in the week, as much faster than expected increase in US crude stocks dampened the consumption outlook for the commodity.
The US oil stocks rose 14.3 million barrels last week, the American Petroleum Institute said on Wednesday while analysts had been expecting an increase of 3.2 million barrels.
Brent crude for spot delivery fell to $58.41/bbl, 1.5% down on the day and adding to the 4.7% slide on Wednesday. The commodity had touched as high as $62.97 on Tuesday, its highest since mid-December.
Despite the 7.2% drop from Tuesday's peak, crude prices have not broken through the 14-day EMA, which comes at $57.47 on Thursday forming the first support.
A break of that barrier will take it to $54.17, the 50-day simple moving average that serves as the next support line. The commodity will still have to travel to break the downside barrier of an upward channel that dates back to mid-January.
A break of the channel support at $52.38 will weaken the reversal since last month and open doors to new lows below the 13 January multi-year low of $45.16/bbl.
However, as long as the $54 level holds on the downside, the commodity has risks more towards north rather than south. Also, $52.4 level needs to be broken for the confirmation of weakening of the uptrend since last month.