It wasn’t long ago that all the attention for oil traders was on overhead resistance at $66-66.50. That level held up almost to the tick and since that point prices have declined sharply.

The trade wars between China and the US to some extent haven’t had the same impact that we’ve seen on equities. Generally, there is a high correlation between the two, but it can vary depending on the time frame.

So as equities have declined, Crude has declined as well. Just not with the extreme levels that we’ve seen in stocks. At this point, it doesn’t appear that China would impose tariffs on oil, which could shake up the market.

We also saw on Friday the latest Baker Hughes rig count, climb by 10. Another sign that US production is strong.

This week outside of the two major supply releases, we also get the monthly production updates from OPEC and IEA. There’s plenty of focus on OPEC as they have been trying to reduce production to drive prices up. However, the US has stepped in to ramp up production of their own.

Eyeing $60 Support

The resistance level at 66.00 held as mentioned and price is now in a downtrend.

I think we will see a move to $60.00 this week. Given the nature of the trend and just how strong resistance was at those higher levels, I think we should look for a trade into $60.00.

I don’t think it will be an extended move, but certainly, there is enough momentum to drive it.

Crude Oil – 240 min Chart.