Crude Touches 3-month High, More Gains Ahead?
Crude oil has shown small daily gains throughout the week, and this trend has continued on Thursday. Currently, West Texas Intermediate crude futures are trading at $60.93, up $0.06 or 0.11%. Brent crude oil futures are trading at $66.32, up $0.21 or 0.32%. On the fundamental front, unemployment claims were higher than expected for a second straight week. Although claims dropped from 252 thousand to 234 thousand, this figure was above the forecast of 225 thousand. There was disappointing news from the manufacturing front, as the Philly Fed Manufacturing Index fell to just 0.3, compared to the estimate of 8.1 pts. This marked a 6-month low.
Optimistic Outlook for Oil
Crude prices have jumped an impressive 10.00% so far this month, and the short-term outlook is positive for crude. The newly minted ‘Phase 1’ trade agreement between China and the United States has put the brakes on more damaging tariffs and raised hopes of further limited trade accords between the sides. The U.S. and China are the world’s two largest consumers of oil, and the deal is expected to raise demand for crude and boost crude prices. As well, OPEC members have agreed to further production cuts, although enforcement of production agreements has been spotty in the past. Crude has gained 2 percent this week, buoyed by solid U.S. economic data and a bullish EIA crude inventory report, which showed a drawdown of 1.1 million barrels last week.
Technical Analysis
Crude has been on an uptrend for the past week and has tested the 61.00 line for the first time since mid-September. Above, the line of 61.50 is vulnerable. The next resistance line is at 62.25.
On the downside, 58.50 has some breathing room in support as the pair has moved to higher levels. Below, there is support at 57.50. There was a significant development earlier in the week, the 50-EMA crossed above the 200-EMA, which is a bullish sign for crude.
This article was originally posted on FX Empire
