Crude oil uptrend has reached critical resistance

13 May, 2016

This week has seen a renewed upsurge for crude oil prices sparked by several unexpected events and news that have helped alleviate ongoing oversupply concerns, at least temporarily. Factors contributing to this rise included: wildfires in Canada that have dramatically disrupted Canadian oil production, a report by the US Energy Information Administration of an unexpectedly large decrease (-3.4 million barrels) in US crude oil inventories, and a rise in the global oil demand forecast for 2016 to 1.2 million barrels per day by the International Energy Agency.

Aside from these very recent events, crude oil prices have generally been rising in a sharp uptrend channel since January as US oil production has slowed substantially. This rise has occurred despite continued high output from OPEC countries and other major oil producers, who failed last month to reach any agreement on a proposed deal to coordinate an oil production cap.

For the Brent crude oil benchmark, this week’s rebound and rise after the previous week of pullback has brought the price of oil back up to approach a major technical resistance area at $48 per barrel. This level was last reached in late February, when Brent established a new 5-month high at the top of the noted uptrend channel. The $48 level also represents the 50% Fibonacci retracement of the prolonged slide from the $70-area highs in May of last year down to January’s lows around $27. During the course of the sharp uptrend and recovery since those January lows, Brent’s 50-day moving average formed a technical “golden cross” in late April by moving above its 200-day moving average, suggesting continued bullish momentum.

Within the context of this strong uptrend momentum, however, the $48 resistance level continues to pose a key technical obstacle to a further rise. If price is able to make a strong and sustained breakout above this $48 obstacle, it could open the way towards the next major upside target at the key $54 resistance area. In the event that the $48 resistance level holds, however, Brent crude could potentially sustain a swift and sharp retreat back down towards the major $42 support level.


Source link  
Signs point to strong labor market

The US jobs report for January is set to be released on Friday morning, just two days after the Federal Open Market Committee (FOMC) announced its decision...

Trump Inauguration Market Outlook

Friday, January 20, 2017 will mark the historic inauguration of what promises to be a highly unconventional US...

Will the Trump Rally extend beyond inauguration?

As the world continues to watch US President-Elect Donald Trump prepare for his January 20th inauguration, key financial markets....


Crude surges as non-OPEC producers agree oil output cut

Crude oil prices surged a huge $3 dollars or 5% higher at the Asian open with Brent briefly trading north of $57 and WTI above $54 a barrel before pulling back slightly...

Could oil end its 5-day losing run?

There are tentative signs that crude oil prices could bounce back today after falling for 5 consecutive and 9 in the past 11 days. As well as oil prices being oversold, bearish speculators may reduce their exposures ahead of the weekend...

Crude oil outlook worsens as US inventories soar

The bad news for crude oil began recently after doubts started emerging with regard to a proposed OPEC deal to cut oil production. Partly as a result of these doubts, crude oil prices for the past two weeks have virtually been in a state of free fall...


Market jitters abound ahead of Fed, Election

Key financial markets, most notably with respect to equities and the US dollar, have felt increasing pressure and heightened volatility in recent days as several primary risk events draw ever closer...

US Presidential Election: Final Debate Aftermath

With the dust having settled after Wednesday final US presidential debate of the 2016 campaign between Donald Trump and Hillary Clinton, the results have become rather apparent...

US Presidential Election: Potential Market Impacts

As of this writing, the current analysis of the electoral college map is predicting around 273 votes for Clinton against 186 for Trump, with 270 votes required to win the presidency...

  


Share: