Like many of the other commodities and present markets, Crude oil continues to remain within the range of the hard-hitting momentum from earlier in the month now starting to wane. The ceiling of resistance, when looking at it from a technical perspective, is highly well defined at exactly {currency}52 per barrel for the WTI contract.
On the 10th of the month, the price level was capped, at this level, the steady move higher. There was a widespread up candle touching an intraday high of {currency}52.03 per barrel before the session and day closed at {currency}51.78 per barrel.
The price level was also tested again the next day, which occurred when the congestion phase took hold. The level is now clearly defined with central highs and lows to the ceiling and floor, including with the support building at the {currency}49.50 level per crude oil barrel. If there is a breach in the resistance of the current limit, then the {currency}54.50 per barrel is the next most likely area of price resistance. Nevertheless, for any sustained move higher, the volumes may need to be picked up dramatically from those who presently remain average for the meanwhile.
In opposition to the technical picture, there are fundamental aspects to be considered, with oversupply, weak economies, the continued US dollar strength and Opec supply is that which controls all by adding its weight to the price chart. As stated by Fatih Birol, the executive director, at the IEA conference happening at present in Singapore, that is likely that the old demand may weaken further. The global demand only rises by 1.2 million barrels per day, which is the current 1.8 million barrels per day in 2016.
The only hint of hope for a continuation of the increase in consumption comes from China. This is against the trends for other markets.Fatih Birol’s view, despite this, is that the dynamic with regards to supply/demand would not be re-established until 2017. According to his opinion, OPEC’s planned cuts in the supply are unlikely to have much effect regarding propping up the price of oil for other member states. This may just allow the production higher from other parts of the world, paired with an increased production from the alternative suppliers of energy.
On the whole, the long-term outlook is more pessimistic when its comes to the price of oil. With the given technical picture, it may seem that the {currency}55 per barrel could be the absolute top for the mean time. However, if the resistance continues with regards to {currency}52 per barrel, then there may be a retracement back to {currency}49.50 per barrel. This retracement back could mean a longer-term move to re-engage, in due course, with {currency}47.50 per barrel volume point of control.
Risk Warning: Users should be aware that all investment markets carry inherent risks, and past performance does not assure future results. Trading of any kind is a high-risk activity, and you could lose more than you initially deposited. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 73-89% of retail investor accounts lose money when trading CFDs. Please be sure you thoroughly understand the risks involved and do not invest money you cannot afford to lose. Your capital is at risk. Advertiser Disclosure: TopBrokers.Trade is an independent professional comparison site funded by referral fees. The compensation TopBrokers.Trade receives is derived from the companies and advertisements featured on the site. Due to this compensation, we can provide our users with a free comparison tool. Unfortunately we are unable to list every broker or exchange available, however, we do our best to review as many as possible.
