Current trend

Last week, WTI Crude Oil prices climbed to 73.00 but since Donald Trump returned to the White House, they have lost ground, trading at 69.70. Prices are under pressure as Hurricane Rafael weakening. Over 25.0% of oil and 6.0% of gas production capacity in the Gulf of Mexico was still offline over the weekend but Shell Plc. and Chevron Corp. have announced crews are returning to the rigs, indicating that production volumes will soon resume.

New steps by the Chinese government are also having a negative impact on the price. Last Friday, at a meeting of the National People’s Congress (NPC), plans to support the national economy were announced. However, they did not include direct fiscal stimulus and currency interventions, which increases the risks of oil demand decrease from the leading importer. Experts suggest that the country’s authorities are taking a cautious position in anticipation of the first steps of the new American administration.

The victory of the Republican Party representative, Donald Trump, in the US presidential election remains the most serious factor of uncertainty for the market. On the one hand, he may introduce protective duties on Chinese imports, putting pressure on industry and reducing global demand for oil. On the other hand, the new head of state may tighten sanctions against Iran and Venezuela, as was already the case during his first term, decreasing oil supply. Which of the expected vectors of foreign policy of the new American administration will have a more serious impact on the market is still unknown.

Support and resistance

The trading instrument is moving within a long-term downward channel. The price is approaching 68.75 (Murrey level [6/8]). After a breakdown, it may reach 65.62 (Murrey level [5/8]), 62.50 (Murrey level [4/8]) area. In case of consolidation above 71.88 (Murrey level [7/8]), a resumption of positive dynamics to ​​75.00 (Murrey level [8/8]) and 78.12 (Murrey level [ 1/8]) is likely.

Technical indicators maintain a sell signal: Bollinger Bands and Stochastic are directed downwards, and the MACD histogram is increasing in the negative zone.

Resistance levels: 71.88, 75.00, 78.12.

Support levels: 68.75, 65.62, 62.50.

Trading tips

Short positions may be opened below 68.75, with the targets of 65.62, 62.50, and stop loss of 70.70. Implementation period: 5–7 days.

Long positions may be opened from 71.88, with the targets of 75.00, 78.12, and stop loss of 70.00.