As we come towards the end of another trading month, crude oil price remain firmly rangebound as OPEC’s policy of taking on the alternative energy suppliers in a price war continues. Judging by its recent statements, OPEC is clearly intent on taking the long view to squeeze these companies out of business, and as the rhetoric and over supply builds, oil prices are likely to continue to remain waterlogged, with intraday movements more likely to be driven either by the US dollar or local fundamentals in the short term. Even the recent transition on the weekly oil inventories from a build to a draw has failed to provide any meaningful momentum for the commodity.
From a technical perspective oil continues to trade between the ceiling of resistance at the $62 per barrel level above, and a platform of support below in the $57 per barrel region. Last week’s price action tested this level once again with the long legged doji candle of Wednesday, and a clear signal of further indecision ahead. Thursday’s response was weak, with the market attempting to rise on low volume and duly reversing once again on Friday to test the upper level of support in the $59.50 ber barrel area, a level which has held once again in early trading today. These three levels now define the key areas on the daily chart, and until one is breached, then we can expect to see further congestion for oil in the short term
Even the recent weakness in the US dollar has failed to provide any momentum for oil, and with the CRB index continuing to remain heavily bearish, the outlook for oil remains negative.
By Anna Coulling
Charts are from NinjaTrader and the trading indicators from Quantum Trading.
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