Crude Oil Pauses After Strong Rally

Crude oil is steady on Friday, after an impressive rally of 5.5 percent over the past two days. In Friday’s North American session, West Texas Intermediate crude oil futures are trading at $58.33, up $0.08 or 0.14%. Brent crude oil futures are trading at $63.24, up $0.82 or 1.35%.

Will Crude Hit $60?

Crude has treated traders to plenty of volatility and has fully recovered after sustaining sharp losses earlier in the week. Despite this week’s swings, crude has enjoyed an excellent month of November, with gains of 7.7%. The lofty level of $60.00, which was last reached in September, appears within striking distance. Tensions in the Middle East have been the catalyst for this week’s sharp gains in oil prices. First, there was a report that Yemen’s Houti rebels had intercepted a Saudi fighter jet. As well, there have been violent protests in cities across Iran, and authorities responded by shutting down internet services. The clashes have unnerved investors and put strong upward pressure on crude prices. Tensions in the Persian Gulf remain high, and the pause in crude’s upward movement could prove to be a short one.

The spotlight on Friday is on the manufacturing sector, with the release of the well-respected ISM Manufacturing PMI. In September, the index rose to 51.5 pts, marking a 6-month high. Still, this points to stagnation in manufacturing, which has been dampened by the ongoing trade war with China and weak global economic conditions.  The PMI is expected to remain at 51.5 pts in the upcoming release.

Technical Analysis

On Thursday, crude gained over 2 percent. WTI/USD broke above resistance at 57.50 and proceeded to test resistance at 58.15. This line remains fluid in Friday trade. Above, there is resistance at 59.30. This line, which has not seen action since mid-September, is protecting the symbolic 60.00 level.

On the downside, the 200-EMA line is at 56.99. This is followed closely by support at 56.50. Below, the 200-EMA is currently at 56.06, protecting the 56.00 level.