Geo-politics support Oil prices

USOIL, Daily

On Thursday I wrote, “USOil upside trend however has begun since last week rising from year lows, i.e. 47.07. The commodity presents a bullish movement, above the 200 Day EMA at 48.70 but also above the key level of 51.00. The 4-hour chart prompted a long position due to the hold at 200-period EMA of 50.80 level several times today. Hence based on a 14 period ATR number, target was set at 52.00, which is the confluence of the 61.8 Fibonacci level. Target 2 is at 52.65.”  T2 was achieved on Friday for a net gain of 99 pips.

Crude prices have rallied some 12% in less than two weeks, which has been the longest winning streak since last August, and there are signs of rally fatigue, contributing to some long squaring ahead of weekly U.S. inventory data. Today, WTI crude printed one-month highs of $52.23 in London, and has been trading on either side of $53.00 since. Support has come from geopolitical concerns over Syria, and news that Libyan production has been cut again, with the closing of a major field, while Russia has said recently is production cuts would top 250k bpd by the end of April. On the other side of the coin, current prices continue to bring additional U.S. shale production to the market, with Baker-Hughes last week reporting the 12th straight week of increased oil rigs in operation.

Hence the commodity remains strong prompting long position from March, since it still trades north of the key 200 day moving average.  The extension of upper Bollinger bands and the positive Parabolic SAR, suggest that trend will continues moving higher in long term, while some trend corrections might occur in intraday timeframes. Hence entry was taken at 52.94, with Target 1 at 53.50 and Target 2 at 54.50

Therefore, it seems that there is a lot of upwards strength, unless commodity break below the $51.00-52.00 support zone.

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Andria Pichidi

Market Analyst


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