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The price of West Texas Intermediate oil continues to steadily rise as bullish news in the energy sector propels the price oil to an eleven-month trading high. Despite looking overextended in the near-term, a continuation of the recent upside pressure certainly looks feasible over coming weeks.
Earlier this week the IEA weekly report showed an unexpected oil draw, which gave the price of oil a solid boost to the upside. Additionally, the recent OPEC meeting gave a nod to more output constraints, which is seen as positive for oil price.
OPEC members agreed to keep the current output levels intact as the demand for oil continues to take a hit from the COVID-19 pandemic. Highlights of the meeting including an endorsement of Saudi Arabia and Nigeria’s continuous effort to mute supply.
A compelling case can be made for further oil price appreciation while OPEC members continue to agree to output constraints. At the moment all OPEC members appear to be aligned, which a considerable achievement considering past disputes and the colourful history of the committee.
Other factors underpinning the price of oil is the Biden administration’s proposed $1.9 trillion stimulus package and their action towards the Keystone pipeline, which runs from the US and Canada. The proposed Green New deal could also be bullish for oil prices as the Biden administration further takes on the US fracking industry.
Longer-term, the Green New deal may be bearish for the price of oil as the US seeks alternative sources of energy. But in the near-term, oil traders are likely to focus on the supply issues and possible scarcity of oil while supply is muted.
Market sentiment towards WTI oil is very bullish at the moment, which could mean a short-term correction is on the cards. The ActivTrader Market Sentiment tool shows that some 79 percent of traders are bullish towards further gains in Crude oil.
WTI Oil Short-Term Technical Analysis
According to the four-hour time frame the MACD indicator shows that negative price divergence is present until the $54.40 level, which basically means that a pullback could happen at any time.
Traders that are looking to get into the prevailing price trend may get their chance here if the price of WTI oil does correct lower and the negative divergence is unwound.
The four-hour time frame shows that an ascending triangle pattern has formed. If price starts to falter under the $55.20 level then WTI could take a quick tumble under $55.00
Source By ActivTrader.
WTI Crude Medium-Term Technical Analysis
Looking at the daily time frame chart, a key long-term trendline, around $54.40 level has recently been broken. Lower time frame analysis could be aligning with higher time frame analysis, as price corrects back towards the key trendline.
Or in other a key technical test of former resistance now turned support could be about to take place, around $54.40.
Interestingly, another major trendline also exists on the monthly time frame chart and is located around the $60.00 level. In theory, if the $54.40 support level holds that bulls could attack back towards the $60.00 level.
Source By ActivTrader.
