WTI: With Trump’s Intervention… Oil May Bottom

Oil may have formed at least a near-term bottom yesterday...

Energy 5

If traders didn’t already have a reason to wake up and pay attention, maybe this realization will help: We’re currently navigating times that hundreds of future books will be written about.

For market participants, there’s arguably no market more interesting right now than oil. After yesterday’s big drop on fears of weak demand and illiquid markets, prices are surging back a staggering 24% so far today. While oil was already bouncing back strongly along with general risk appetite, so-called “black gold” went vertical this afternoon on rumors that Russian President Putin was willing to engage Saudi Arabia in discussions about cutting production. Astute traders will note that the failure to reach an agreement over production levels led to a huge supply glut hitting the market just as demand collapsing, a perfect storm for crude bears. Hints that the Trump Administration may intervene in the whole kerfuffle have also helped boost prices.

Source: TradingView, GAIN Capital

In any event, WTI is trading back above the key long-term support zone we highlighted near 25.00. Given that the support in this area dates back decades and prices only closed below it for a single day amidst a broader panic and illiquid market conditions, this zone may still continue to put a floor under prices moving forward.

Oil traders will obviously need to a keep an eye on the headlines out of the US, Russia, and Saudi Arabia in the days to come, but the price action and rumors of hints in the fundamental supply/demand situation suggest that oil may have formed at least a near-term bottom yesterday.


More from Crude Oil

Related Articles

Disclaimer: GAIN Capital UK Limited (trading as "Forex.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, Forex.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by Forex.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although Forex.com is not specifically prevented from dealing before providing this material, Forex.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.