Crude oil keeps pushing higher. Brent finished the week above $70, while WTI rose above $63. Will the commodity continue its way to the upside?
Why is it important?
It’s possible to break the factors which have an impact on oil prices into those that influence the supply for the commodity and those that affect the demand for it.
Among the positive factors on the supply side, we have to mention the market’s confidence in OPEC’s supply cuts as well as the escalating conflict in Libya that may derail oil production in this country. Another OPEC member, Venezuela, may also diminish the output as it’s hit by the American sanctions and energy blackouts.
On the demand side, there is a solid US employment report that managed to dispel some of the concerns about the global economic slowdown.
As for the negative factors, the number of active oil rigs rose by 15 in the United States during the past week, according to Baker Hughes. This was the biggest increase in almost a year. In addition, oil demand is limited by the remaining concerns about the trade conflict between the United States and China, although every day the market gets more and optimistic that the resolution will take place. Such hopes help oil price to move higher.
All in all, positive factors for oil prices seem to outweigh the negative ones, although occasional volatile swings will surely happen as the market’s sentiment changes on a daily basis.
Brent has managed to close above the 200-day MA in the $69.60 area. Further obstacles lie at $71.40 and $71.70. After that, targets will be at $72.75 (61.8% Fibo) and $75.00. Below $69.60 support is at $68.40 (50% Fibo).
WTI approaches resistance at $63.89 (61.8% Fibo). Above this obstacle, the way to $65 and $68 will be relatively easy. Support is at 461.50 (200-day MA) ahead of $59.70 (50% Fibo).