Crude’s recent price action remains uninspiring with technical indicators still very overbought.
Crude oil limped into the weeks end with both Brent and WTI finishing nearly unchanged, as they effectively had for the previous five days, marking the end of a sideways week. As the dust settles on the intraday volatility of the last week, oil bulls will be disappointed with the price action, with crude prices having gone nowhere. From a technical perspective, both contracts Relative Strength Indexes (RSI) are still in a severely overbought territory, signalling that a potentially aggressive short-term downward correction is still a genuine possibility.
The Baker Hughes Rig Count data which came out late Friday showed that U.S. producers added nine rigs. Although unsurprising given WTI’s rally, it is unlikely to be supportive of WTI in Asian trading. Venezuela, on the other hand, could prove supportive to prices this week, should it officially default. Alternatively, the International Swaps and Derivatives Association (ISDA) could do the job for them by ruling some of the national petroleum companies debts are in technical default.
Brent crude is unchanged at 63.85 this morning and has now formed two daily double tops over the past week. The resistances at 64.40 and 64.85 now for a formidable barrier to further rallies in the short-term. Support comes in at 63.00 and then 62.00 with a break opening a deeper correction to the 60.00 area.
WTI is unchanged at 56.80 with Wednesday’s high at 57.80 its still untested initial resistance. A daily close above this level opens up a rally to 61.00 with little technical resistance in between. Support lies at 56.00 and then 55.50 followed by trend line support at 54.15.