Crude Prices Steady at Start of Week
Crude oil has posted small losses in Monday trade. In the North American session, U.S. West Texas Intermediate crude oil futures are trading at $55.94, down $0.66 or 1.1% on the day. Brent crude oil futures are trading at $61.58, up $0.36 or 0.61%.
Crude Prices at 4-Week High
Oil prices enjoyed an excellent week. WTI jumped 5.3% last week, its strongest weekly gain since mid-September. There was a combination of factors that helped boost crude prices last week. First, U.S. crude inventories surprised the markets with a drop of 1.7 million barrels, as the forecast had projected a gain of 2.5 million. This marked the first drawdown after five straight weeks of surpluses. WTI futures jumped 2.8% on Wednesday, in response to the surprise deficit.
As well, there has been speculation that OPEC members may reduce output in order to compensate for reduced global demand. Historically, however, OPEC members have had difficulty reaching agreements on lower output quotas, with some countries reluctant to reduce revenue from oil exports. Finally, there is greater optimism that the bitter trade war between the U.S. and China could be resolved, at least partially, with a limited trade agreement. This would allow for the termination of tariffs, which have hurt both economies, while leaving the most intractable issues for another day.
Crude Technical Analysis
Crude posted strong gains last week, and I am keeping a close eye on the 50-EMA, which is currently at 55.24. Crude prices broke above the EMA line last week, which is a sign that crude is currently on an uptrend. I would expect to see some movement this week towards resistance at the 58.00 level. On the downside, we find support at 53.00. This line was tested in mid-October, but has weathered the pressure and has some breathing room.
This article was originally posted on FX Empire
