OIL - Potential start of move up?
Fundamental Analysis
Oil prices (WTI) extended its recovery, rising yesterday to their highest level in two weeks, just over $74, after advancing for a second consecutive session. After political disputes between Iraq, the semi-autonomous Kurdish region of Iraq, and Turkey halted the export of approximately 450,000 barrels of crude per day, gains were driven by disruptions in energy flow.
Oil's upside in the near term could be bolstered despite rising headwinds for growth-linked commodities, such as the increasing likelihood of a U.S. recession, if flows are not restored quickly. Consequently, traders ought to watch out for improvements in the Center East, basically until territorial erosions start to ease.
Technical Analysis
The recent bounce back from $64 price area is empowering, however oil still bearish in the big picture especially after that big sell-off from early March, with prices well below the current major MAs.
So, in the event of a bearish reversal, the $72 price will serve as initial support, followed by the $70 psychological price level. Selling interest could accelerate quickly if that last level is decisively removed, and heading down further to retest the $64 price area of that Lower Low. And, the $62 region (red line) could still be a target, as a subsequent pivotal support on further weakness pass the $64 price level.
Now, on the other hand, if price keeps pushing up, the resistance would lie in TL at $76 price range. In an even of a Trendline BO scenario, buyers could gain strength to launch an offensive aiming for $81 price level, which corresponds to the 2022/23 sell-off. Additionally, this push could encounter rejection or some resistance from this region (not shown on chart) and would then range for a while as per an indecisive market.
All that said, from a pure TA stand point, we believe there is a good chance that price will keep pushing up, so let’s see!
Oil prices (WTI) extended its recovery, rising yesterday to their highest level in two weeks, just over $74, after advancing for a second consecutive session. After political disputes between Iraq, the semi-autonomous Kurdish region of Iraq, and Turkey halted the export of approximately 450,000 barrels of crude per day, gains were driven by disruptions in energy flow.
Oil's upside in the near term could be bolstered despite rising headwinds for growth-linked commodities, such as the increasing likelihood of a U.S. recession, if flows are not restored quickly. Consequently, traders ought to watch out for improvements in the Center East, basically until territorial erosions start to ease.
Technical Analysis
The recent bounce back from $64 price area is empowering, however oil still bearish in the big picture especially after that big sell-off from early March, with prices well below the current major MAs.
So, in the event of a bearish reversal, the $72 price will serve as initial support, followed by the $70 psychological price level. Selling interest could accelerate quickly if that last level is decisively removed, and heading down further to retest the $64 price area of that Lower Low. And, the $62 region (red line) could still be a target, as a subsequent pivotal support on further weakness pass the $64 price level.
Now, on the other hand, if price keeps pushing up, the resistance would lie in TL at $76 price range. In an even of a Trendline BO scenario, buyers could gain strength to launch an offensive aiming for $81 price level, which corresponds to the 2022/23 sell-off. Additionally, this push could encounter rejection or some resistance from this region (not shown on chart) and would then range for a while as per an indecisive market.
All that said, from a pure TA stand point, we believe there is a good chance that price will keep pushing up, so let’s see!
The cartel initially decided to reduce production by 2 million barrels per day until December. The most recent move indicates that Saudi Arabia and its partners want to prevent further sell-offs, despite criticism from the US administration and evidence of divergent goals between the two nations.
After the price fell to its lowest point since August 2021 in March, Monday's jump spiked above the psychological $80 level for the first time in almost a month.
So from our point of view as shared last Friday (before that big bullish move), we are still bullish on oil, please see TA below. Right now we expect a corrective pullback to downside, and so we will wait for a long trade opportunity to present itself.