Crude Oil Choppy Session Continues – Bullish Bias Seems Dominant
Arslan Butt • 2 min read
Today, in the early Asian trading session, the WTI crude oil prices failed to extend the bullish move of the previous session, taking a U-turn from a one-week high and dropping to the $39.68 level, while representing 0.25% losses on the day. However, the reason for the selling bias in the oil prices could be attributed to the heightened concerns over a second economic lockdown in the U.S., triggered by the surging number of confirmed coronavirus cases.
Let me remind you that the United States has just recorded its biggest one-day rise in coronavirus cases. Meanwhile, the crude oil buyers failed to cheer the upbeat inventories report released by the Energy Information Administration (EIA). At the press time, the WTI crude oil prices are currently trading at 39.88 and consolidating in the range between 39.48 – 40.50. However, the traders seem cautious about placing any strong positions ahead of the busy U.S. economic calendar. The West Texas Intermediate (WTI) crude futures dropped by 10 cents, or 0.3%, to $39.72 a barrel, at 01:48 GMT, trimming a 1.4% rise from the previous day.
Recently, the crude oil prices took modest bids during the previous session, mainly after the U.S. Energy Information Administration data indicated that U.S. crude inventories had fallen by 7.2 million barrels against the forecast of -0.71 million barrels, and +1.442M previously.
Apart from this, the crude oil gain in the previous session was further bolstered by the better-than-forecast activity numbers from China, the U.S., and the Eurozone. The hopes of further stimulus also exerted some positive impact on the risk sentiment.
On the coronavirus front, the biggest one-day rise in the U.S. coronavirus (COVID-19) cases recorded recently have urged California to reimpose some lockdown measures that could dampen the recovery in the demand for fuel. As per the latest report, the daily new coronavirus cases in the U.S. crossed more than 48,000 figures on Wednesday, registering the highest increase since the start of the pandemic. The heightened concerns over a second economic lockdown in the U.S. turned out to be one of the key factors that kept a lid on any additional gains in the oil prices.
Daily Technical Levels
Pivot Point 39.82
Technically, the WTI has violated the ascending triangle pattern at 40, suggesting odds of a continuation of the bullish trend in the market. Crude oil prices could soar sharply towards the next target level on the 40.50 and 41.69 level today. The support continues to hold at around 39.50 – the resistance level, which is now working as a support. Currently, the RSI and MACD are also supporting buying. Therefore, we have opened a forex trading signal to buy crude oil, with a target of 40.30. Stay tuned to our signals page for more updates. Good luck!