Oil was on the front foot at the start of the New Year buoyed by the prospect of a signed US – China trade deal and rising tensions in the middle east, in addition to shrinking stockpiles and the start of deeper OPEC plus production cuts. However, the push higher has been short lived.
Realistically though, traders will want to see this optimism reflected in stronger data before we see a meaningful advance in oil prices.
Levels to watch:
After starting 2020 on the front foot WTI is showing evidence of weakness. Falling volumes raise doubts over bulls strength going forwards. After failing to break through resistance close to $61.50, the bulls have lost momentum and WTI has seen heavy selling over the past hour. WTI has fallen below 50 SMA although remains firmly above 100 SMA and 200 SMA. Oil bulls need to push through $61.50 to open the door to $61.95 and $62.31. A breakthrough support at $60 could negate the uptrend.
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