WTI Crude Oil Price Forecast: Oil Rises Alongside Syrian Tensions
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- Crude Oil Technical Strategy: Closing In On Breakout Level of $42.76
- Fundamentals Could Shift Sentiment Bullish
- Resistance Ahead Remains, But $40 Support Is Holding
Tensions rose on Tuesday in Turkey along with the price of Oil. The source of the tensions was the shooting down of a Russian Jet by the Turkish military in the northwestern Syria. Russian President Vladimir Putin was quick to promise serious consequences for the act, and he was quick to state that Russia will not tolerate such crimes as taking down their jet, which comes weeks after a Russian civilian plane was downed in Egypt. This news adds to fears of an escalating civil war in Syria that is spiraling to new levels and for the Oil market, is stacking with Monday’s comments from Saudi Arabia, that OPEC was willing to cooperate with Non-OPEC Countries. The Saudi announcement was seen as an encouraging sight that OPEC could potentially stop pumping record volumes that are keeping inventories so high and depressing prices.
On Tuesday, after holding the $40.00 level for most of last week, Oil is attempting a breakout. The Friday high, alongside the October 27thlow, has acted as a polarity level on the charts. A polarity level is when support turns into resistance or resistance turns into support. Price breaking through a polarity point helps to show a change in the market could be underway. Yesterday, we noted that a bullish development would first be validated on a daily close above $42.76, which was Friday’s high, and we’ll continue to watch that level for a close today. Further resistance is seen at the Weekly R2 near $44.30, which was also around jereSeptember’s price support.
RSI is also telling us that a strong move higher could be underway, which is helpful because momentum can be seen as a leading indicator. In addition to the Bullish Divergence on RSI(5), you can see we’re also attempting a bullish breakout through RSI(5) trendline resistance. A confirmed breakout of price above $42.76 and RSI(5) trendline breakout will turn attention toward $44.30, the Weekly R1 Pivot Level. The first breakout level is likely weeks away, but it sits at November Opening Range high of $48.33bbl. As an additional note, Thanksgiving Week in the US has a historical tendency for large moves. Late year, an OPEC meeting caused Oil to drop below $70 violently when US markets were closed as they decided not to cut production, which was needed at the time (and now to stabilize prices). This time, an aggressive move higher could be in the works when U.S. Markets are closed due to rising tensions and OPEC’s new agreement to look at curtailing production. Given the interest in upside, a clear breakout could be aggressive.T.Y.
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