The Oil price edged higher overnight, topping at $44.94/bbl after printing a six-week low of $44.23 after the N.Y. close on Thursday. Oversupply remains a concern going forward, and this morning’s rally is chalked up to nothing more than pre-weekend short covering following the sharp overall losses seen this week. Crude is still down 2.4% w/w and by 8.9% m/m. Prices are also down by some 13% from the levels prevailing in May at the time when the 1.8 mln barrels a day OPEC-led supply reduction was announced to have been extended by nine months.
UK Oil found its feet after plunging over the last week from levels above $49 to a low at $46.70 on Thursday’s low, which is close to the lowest level seen this year. Its over $47.00 and US Oil north of $44.00, both are looking to escape from oversold territory since RSI and Stochastic are both oversold.
Technically wise, a strong bullish closing today, will indicate an evening star pattern formation in UK Oil Daily chart, along with a possible Double top and Double bottom in downwards channel since March. Therefore for next week we are looking for a break above $48.5 – $49 area and the daily Stochastic at a positive slope, in order to believe in a possible retracement of the trend. Meanwhile a continuation of the downtrend will be a break of the significant level at $46, which that will indicate that asset has a new lower low for the year.
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