Crude Oil Price - Talking Points:
- Middle East tensions weigh on crude but with limited impact so far.
- Crude oil looks to building a range
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Technical Forecast for Crude Oil: Neutral
The week ahead forecast for crude oil is neutral and likely to stay range bound unless the market receives a major political or economic shock. While both possibilities still exist, the market is seemingly taking recent US-China trade war news and Middle East political fears in its stride.
This weekend OPEC members, without Iran, will meet for a non-technical meeting in Saudi Arabia. This Joint Ministerial Monitoring meeting will discuss current market conditions and compliance and are also likely to debate oil security measures ahead of the June 25 full OPEC meeting in Vienna.
DailyFX analyst Justin McQueen notes that Oil Backwardation is at a Four-Month High.
The technical outlook for oil remains muted in the short-term with a breakout from the recent six-week range - $68.72/bbl. to $74.84/bbl. – unlikely. The current spot price of $72.00/bbl. currently sits above the 38.2% Fibonacci retracement level at $70.56/bbl. and above all three moving averages, adding additional weight to support. The CCI indicator is nearing overbought territory and may act as a lag on further upside momentum in the short-term.
To the upside, oil needs to break and close above the recent ‘double tops’ at $72.76/bbl. and $72.92/bbl. if it is to move higher and attempt to re-take the April 25 high at $74.88/bbl. the highest print since November 1, 2018.
Crude Oil Daily Price Chart – May 17, 2019
Looking at the four-hour chart, there is a small gap on the April 26 candle between $72.85/bbl. and $73.37/bbl. that may attract interest, although the lower bound may prove difficult to break above in the short-term with the CCI indicator now moving out of overbought territory.
Crude Oil Four-Hour Price Chart – May 17, 2019
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--- Written by Nick Cawley, Analyst
To contact Nick, email him at nicholas.cawley@ig.com
Follow Nick on Twitter @nickcawley1
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