WTI Up Nearly 10% in December

There is a combination of fundamental factors which have helped contribute to this move

Lest anyone have any doubts that the US-China trade deal may not be a big deal, they should look at the price of WTI over the last 2 months!  Only 3 weeks after the Saudi Aramco drone attacks, price put in a hammer low October 3rd near 51.00 and began trading in a rising channel.  Today price closed above the top of the channel near 61.00 (depending how the upper channel trendline is drawn, it may have closed right on the trendline).  And although not as widely followed as other Fibonacci levels, price is near the 78.6% Fibonacci retracement level from the September 16th highs to the October 3rd lows at 60.80. 

Source: Tradingview, FOREX.com

What’s even more impressive is the move since December 1st ,  in which the price of West Texas Oil has rallied 10%.   There is a combination of fundamental factors which have helped contribute to this move:

1)      The China outlook for oil,  as the US-China trade deal has finally been resolved

2)      The meeting in Vienna where OPEC members “agreed” to cut production by 500,000 barrels per day

3)      The promise from OPEC+ (which includes Russia) to cut back production

The vertical green line on the 240-minute timeframe shows price on Monday, December 2nd.  Price opened at 55.40, after putting in a low near 55.00 in the final bar on Friday, November 29th.  WTI has rallied to as high as 61.00 today and has yet to look back! 61.00 is the “Make It or Break It” level.  In addition to this being the rising channel trendline on the daily timeframe, price has also formed a rising wedge on the 240-minute chart.  In addition, the RSI is at overbought levels (however it is not diverging with price).

Source: Tradingview, FOREX.com

If WTI can close decisively above 61.00, there isn’t any resistance until the 63.73 level from the September 16th highs.  If price breaks lower out of the wedge, the target is a 100% retracement of the wedge, which would be back to 55.00.  However, it would have to get through lots of support levels to get there, the first of which is the bottom trendline of the wedge near 60.00.  Below that is horizontal support near 58.67 and the 200 Day Moving Average at 57.63 (see daily).  Not to mention that depending on where the high of the current move is, there will be Fibonacci retracement levels to watch as price pulls back.

At 4:30pm EST the API weekly Crude Oil Stock Change is released.  Tomorrow morning the EIA Crude Oil Stocks Change will be released.  This data tends to influence the price of crude in the short term.  Watch for volatility after the release of this data, especially in these thin, year-end markets. 

Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.

Open an Account