Exciting times for oil as we head towards the end of the week, with WTI rallying over 1.0% and Brent 0.5% as North Korea’s missile test iced the cake of a bullish technical picture for both contracts.
Late New York saw WTI spot spike through the $50.00 mark to touch $50.50 before falling back to a more sedate $49.85 in Asia mid-session trading. Brent scrambled to $56.10 before settling at a still respectively $55.70 during the Asia session. WTI’s move in particular, looked very stop loss driven as the $50.00 mark broke. But there shallowness of the pullback in both contracts can be seen as positive.
With the EIA upgrading oil consumption forecasts, U.S refining quickly recovering from hurricane induced shutdowns and OPEC suggesting inventories are falling, the picture has been one of good news this week for crude generally.
From a technical perspective Brent in particular though is approaching its moment of truth. It is now just one dollar away from the mega resistance region of 56.50/57.00 that has capped gains for all of 2017. Another failure here would imply a potentially deep correction could be on the cards, while a daily close above sets the stage for a test of 60.00 which would no doubt bring smiles to the faces of Saudi Aramco’s IPO team.
Longer term support is at 52.15 where Brent’s 200-day moving average and its Long-term trandline support meet today. In the bigger picture, Brent remains technically constructive above this level.
WTI spot has broken out of its range between its 100 and 200-day moving averages but must close above the 50.00 mark to give bulls renewed energy. Initial resistance is at the overnight high at 50.50 followed by the May highs at 51.65. Critical support is at 49.30 today. This being a previous triple TOP and the 200-day day moving average.
This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.