Crude Oil Markets Seems Try to Recover After Initially FallingRecently, the oil market follow the general run of risk sentiment. However, oil markets are still weaker this morning despite the rebound in risk sentiment.
The last main story in oil markets was the news over the weekend of the discovery of new oil reserves by Iran. They were reported to have discovered an oil field containing the equivalent of 53bn barrels of oil. However, it is not clear how much of that is new or commercially viable. The last thing OPEC needs is more oil discoveries given oil’s current level of abundance...
In spite of a large inventory build the net long oil positions on US crude increased last week for the third consecutive week mainly due to the tariff rollback headlines. So without a reaffirmation of progress between the US and China, these new contracts remain susceptible to headline risk and even a long position squeeze.
Technically, on the daily chart the West Texas Intermediate Crude Oil market initially fell towards the $56 level underneath before turning around and showing signs of strength. At this point, the market looks very likely to turn around and try to reach towards the $58 level. Breaking through that level of course would be very bullish but will run into a significant amount of trouble near the $60 level. In that area is located 78.6% Fibo retracement level (of the fall from the Sept. high 63.68 to the October low $51.06) at $60.77.
To the downside, there is a significant amount of support near the 200-day EMA which is closer to the $55.40 level. Underneath there, the $54 - 53.70 area be targeted for support as well.
Looking at the overall market though, we are essentially in a massive consolidation area.
