Crude Oil News
22 FEB 2018

WTI crude oil is turning upon hitting the ceiling at the area of interest around $62 per barrel. Applying the Fib extension tool shows the next downside targets. The 100 SMA has also crossed below the longer-term 200 SMA so the path of least resistance is to the downside. In other words, the selloff is more likely to resume from here. The 38.2% extension is just below the $60 per barrel mark while the 50% extension is close to the swing low at $58 per barrel.

Stronger selling momentum could take WTI crude oil down to the 61.8% extension at $57.67 per barrel or the 76.4% extension at $56.45 per barrel. The full extension is located at $54.49 per barrel. The commodity is struggling to sustain its recent bounce as traders continue to expect a build in inventories as reported by the American Petroleum Institute and Energy Information Administration.

At the same time, risk aversion in the financial markets has been in play, weighing on commodities overall. US dollar strength is also being blamed for the slide in risk assets as higher bond yields and stronger tightening prospects could weigh on business and consumer activity down the line.

Nonetheless, it helps to note that the OPEC reported record compliance levels for January and is foreseeing stronger global demand in the months ahead. This could keep the oil market balanced and the commodity trading safely within a range.

Then again, the cartel is due to meet again in June, along with non-OPEC members. This could prompt a reevaluation of their output deal in case the market is overheating by then. For today, the FOMC minutes are due and expected to have a huge impact on dollar price action. More currency strength could continue to dampen energy prices, which might lead to another leg lower for crude oil.
 


Source :
FXDAILY