Oil prices continue lower after Trump comments
Oil prices are trading a little higher on Monday, paring Friday’s losses which came after Donald Trump claimed to have spoken with OPEC an demanded they bring prices down.
It’s worth noting that this is not the first time Trump has talked about oil prices and pointed the finger of blame at OPEC. He’s also repeatedly tried to influence OPEC’s decision making when it comes to output but there’s been no evidence that it’s been in any way successful.
So why are markets paying so much attention now? They’re not really. Oil prices were looking very overextended to the upside and Trump’s comments – intentionally or not – provided the perfect opportunity to cut exposure and allow the market to correct.
WTI Daily Chart
That’s why we’re seeing such a decline, not because the market suddenly expects OPEC to be guided by Trump’s outbursts. Still, WTI faces a very interesting test around $60.50-61.50 area, where the 200-day SMA crosses prior support and resistance.
This is where it’s currently running into support and may explain today’s bounce, with it being a fairly logical profit taking level.
Does that mean we won’t see further losses?
Of course not. Price was looking overextended for a reason and Friday’s move doesn’t really constitute a significant correction. Today’s bounce has also, so far, not been particularly significant which supports the view that this may only be some profit taking.
WTI 4-Hour Chart
If this is the case, we may see WTI take another run at this key support in the coming days, a break of which could be the catalyst for further declines.
Support below there, should we break below, could come around $57-58, which has been notable support and resistance over the last six months.
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