WTI reverses and hits 2-week lows under $50 a barrel

Crude oil prices reversed during the American session and dropped into negative territory. Prices of West Texas Intermediate peaked earlier at $50.65 a barrel after the EIA report showed a decline in supplies by 6.02 million barrels (higher-than-expected) for the week ended September 29. But the rally was followed by a reversal in crude prices amid a stronger US dollar and after a report suggested that Libya restarted its largest oil field, creating new concerns over OPEC's ability to compile with their output cut. 

WTI dropped to $49.77 a barrel, the lowest since September 19 and near the end of the session was holding below 50.00, down 1.0%, on its way to the third daily loss in-a-row. 

Technical outlook

The daily chart shows that the early advance was contained by a major Fibonacci resistance around 50.60, to break below the next Fibonacci level, the 50% retracement of the latest bullish run around 49.90, notes Valeria Bednarik, Chief Analyst at FXStreet.

She adds that technical indicators are entering negative territory, straight from overbought readings, supporting additional slides ahead. “In the 4 hours chart, the 100 SMA reinforces the static resistance at 50.60, while the RSI indicator turned south, now around 33 as the Momentum hovers within negative territory, all of which also favors an upcoming bearish extension.”