Crude Oil Approaching Support Confluence
Following a brief move above the 65.52 level resistance (January 2020 highs), price has corrected lower as selling pressure kicked in. However, while oil holds within the bullish channel running from 2020 lows, the focus is still on a further push higher in the near – medium term. Price is now approaching an area of strong technical confluence around the 54.68 level where we have good structural support, the rising channel low and the retest of the broken bearish trend line. This is an area where are likely to see buying interest kick in to cause a continuation of the uptrend.
Key Data to Watch
In terms of data to watch this week, the main element to watch is the US crude oil inventories release by the EIA later today. The group is forecasting a drawdown of 2 million barrels which should be further supportive for oil prices in the near term. More broadly, the tone of the IMF meeting so far this week has been supportive for risk assets with the IMF upgrading its global growth forecasts, citing particular strength in the US economy.
In terms of downside risks for oil, any resurgent strength in the US Dollar is likely to created headwinds for further upside. Similarly, any disappointment in today’s EIA release would also likely see oil prices lower in the near term.
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