OIL: Make or Break?
Since the start of February West Texas Intermediate has been range bound between $55.00 to $57.50 per barrel. We have multiple rejections off both regions, and at the time of writing, we are currently sitting at the top of the range at $57.50. We have been trapped in this period of consolidation for 19 trading days now, and this range period from top to bottom equals a 5% move in the sweeter Oil.
As you can see from the 4-hour chart above, we are currently sitting at our infliction point. Our highlighted zone from $57.00 to $57.50 has shown us multiple wick rejections off this level before. It will be crucial to see how we react off this level, a nice wick rejection off this zone and we could be heading back to the lows seen at $55.00. A nice strong bullish daily close above $57.50 and we could be heading to our next resistance area seen at $58.90.
Oil prices rose this morning to the top end of our range, as official forecasts show slower than expected U.S. production and U.S. sanctions stalling exports from Venezuela. The Energy Information Administration (EIA) said on Tuesday, that U.S. crude production was expected to grow more slowly in 2019 than it had previously expected, averaging 12.30 million barrels per day. This had a knock on effect to its projected 2020 production figures, revised down from 13.20 million bpd to 13.03 million bpd. This was following on from Monday's news from Saudi Arabia Minister Khalid al-Falih that the production-curbing agreement would likely last until at least June. Also, Saudi Arabia the worlds top oil exporter indicated that it would cut April exports.
Looking at the fundamentals, there seems to be ongoing work to reduce the production of Oil and in turn, this will push the commodity up further and potentially break out of this range! Await for further confirmations before pulling the trigger, as at the moment we are at a crucial point in time....