WTI crude oil is still moving sideways as it finds support at the $50 per barrel area and resistance around $54.40 per barrel. Price just bounced off the top of its range and might be due again for a test of support.
The 100 SMA is below the longer-term 200 SMA to signal that the path of least resistance is to the downside. This suggests that resistance is more likely to hold than to break or that support is more likely to break than to hold. Crude oil is also currently trading above the moving averages’ dynamic inflection points.
RSI is on its move down to show that sellers have the upper hand. The oscillator has some room to cover before hitting the oversold region so price might still be able to make an actual test of support. Stochastic is also heading lower but is nearing the oversold region to signal that sellers might be exhausted soon.
Crude oil drew a bullish boost from confirmation that the OPEC will be curbing production in order to adjust to weaker demand and also keep prices afloat. Of course many market watchers had been anticipating this so there was some “buy the rumor, sell the news” reaction in play.
Besides, the commodity is now turning its attention to the US-China trade row as easing tensions could prove positive for energy prices while escalation could bring in more losses. Note that the arrest of the Huawei CFO complicates matters as both countries have called a trade truce but the revival of talks on intellectual property could complicate matters.
Meanwhile, geopolitical risks in this week’s schedule could also lead to big moves as the commodity takes its cues from market sentiment. US oil inventories could also determine where the commodity might head next.