WTI Crude Oil: How far can it go?
George Lam June 23, 2020 4:02 AM
As history tends to repeat itself, while the rebound in oil prices was staggering, we might have to avoid being over optimistic...
Thanks to the latest OPEC+ oil cut, oil prices have recouped most of its losses during the selloff started in March.
In early May, we mentioned that history tends to repeat itself and the same may happen soon. While the rebound in oil prices was staggering, we might have to avoid being over optimistic.
WTI Crude Oil price has been trending lower since 2008, given the rise of clean energy and the U.S. shale oil boom. It is worth noticing that the previous OPEC+ oil production cut had led to a roughly 60% rebound in WTI oil price, but failed to change the down trend, as the prices recovery led to higher output again. This time after a remarkable bounce back, the remaining upside potential for WTI oil price could be limited.
Source: Trading View, Gain Capital (WTI Crude Oil Futures weekly chart)
Nevertheless, WTI Crude Oil Futures stay on the upside as shown on the weekly chart after posting a V-shaped rebound. However, it has to break above its nearest resistance level at $44.00, which is the bottom of its previous trading range in 2017 to 2019, to open a path to the next resistance at $48.90. Alternatively, losing the nearest support at $34.00 would suggest that the next support at $29.80 might be exposed.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.