International-benchmark Brent crude oil futures finished sharply lower on Friday as traders reacted to the resignation of Iraqi’s prime minister after weeks of deadly protests, as well as investors jockeying for position before the OPEC+ meeting next week.
Following weeks of unrest in Iraq, Prime Minister Adel Abdul-Mahdi announced plans to resign Friday. Some traders believe an end to the country’s ongoing protests will lead to an end of threats to oil disruption, which is bearish for prices.
On Friday, February Brent crude oil settled at $60.73, down $2.28 or -3.62%.
Daily Technical Analysis
The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $63.57 will signal a resumption of the uptrend. The main trend will change to down on a move through $59.44.
The minor trend is down. The minor trend turned down on Friday when sellers took out the minor bottom at $61.90. This move shifted momentum to the downside.
The main range is $65.59 to $55.35. Its retracement zone is $60.47 to $61.68. This zone is controlling the longer-term direction of the market. On Friday, the market closed on the lower or 50% level of the zone.
The short-term range is $55.35 to $63.57. Its retracement zone at $59.46 to $58.49 is the primary downside target. Watch for buyers on the first test of this zone.
The 50% level at $60.47 and the uptrending Gann angle at $60.35 form a potential support cluster. Trader reaction to this area on Monday is likely to determine the tone of the market. The uptrending Gann angle has been guiding the market higher since the $55.35 main bottom on October 3.
Crossing to the weak side of the uptrending Gann angle at $60.35 could trigger another acceleration to the downside.
Traders fear that the U.S. may lift sanctions on Iraq now that Prime Minister Adel Abdul-Mahdi has stepped aside. If they do, this could flood the market with oil, driving down prices. OPEC and its allies are likely to address this issue at its December 5-6 meeting. Besides discussing an extension of their production cuts into at least June 2020, they may even consider increasing the amount of the output cuts.
This article was originally posted on FX Empire
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