WTI Crude Oil: How far can it go?

As history tends to repeat itself, while the rebound in oil prices was staggering, we might have to avoid being over optimistic...

Energy 3

Thanks to the latest OPEC+ oil cut, oil prices have recouped most of its losses during the selloff started in March. 

In early May, we mentioned that history tends to repeat itself and the same may happen soon. While the rebound in oil prices was staggering, we might have to avoid being over optimistic.

Source: Trading View, Gain Capital (WTI Crude Oil Futures monthly chart)

WTI Crude Oil price has been trending lower since 2008, given the rise of clean energy and the U.S. shale oil boom. It is worth noticing that the previous OPEC+ oil production cut had led to a roughly 60% rebound in WTI oil price, but failed to change the down trend, as the prices recovery led to higher output again. This time after a remarkable bounce back, the remaining upside potential for WTI oil price could be limited.

Source: Trading View, Gain Capital (WTI Crude Oil Futures weekly chart)

Nevertheless, WTI Crude Oil Futures stay on the upside as shown on the weekly chart after posting a V-shaped rebound. However, it has to break above its nearest resistance level at $44.00, which is the bottom of its previous trading range in 2017 to 2019, to open a path to the next resistance at $48.90. Alternatively, losing the nearest support at $34.00 would suggest that the next support at $29.80 might be exposed.

More from Oil

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