On May 5thВ I wrote about wildfires in Canada’s oil producing regions and about US oil production dropping to lowest level since Sept 2014, sinking by more than 100k barrels a day in the week up to April 29th. Based on the fundamentals suggesting less supply and technicals indicating that the prices could move higher I said that I’d be interested in long entry signals inside my buy area at $43.20 – $44.00 with Target 1 at $45.00 – $45.50 and Target 2 at $46 – $46.70.
Crude oil retraced to my buy area on Friday, gave a buy signal and hit target 1 on the same day. Now price has rallied further and has almost touched the target 2. According to Reuters oil producers and refiners braced todayВ for further supply constraints from the wildfires that have shut one half of Canada’s vast oil sands capacity and forced BP and other big oil firms to warn they would not be able to deliver on some contracts.
Price is currently trading near the upper daily Bollinger Bands and the recent highs. Therefore resistance levels of the recent trading range are near but at the same time the price of oil has created two higher reaction lows in the 4h chart. The higher lowsВ increase the probabilities ofВ this market breakingВ higher.Publication source