Crude Oil Punches Above $58, Investors Keep Eye on GDPAfter a sluggish start to the week, Crude oil has posted gains on Tuesday and is back above $58. Will the gains continue?
Crude oil has recorded gains on Tuesday. In the North American session, West Texas Intermediate crude oil futures are trading at $58.20, up $0.35 or 0.60%. Brent crude oil futures are trading at $63.94, up $0.38 or 0.60%.
Investors Eye Trade Talks, Hong Kong Unrest
Crude oil showed extensive volatility last week, with the ups-and-downs in the U.S-China trade talks reflected in the movement of crude last week. The trade negotiations have taken a back seat to the unrest which has gripped Hong Kong. There have been violent confrontations between police and protestors, with the Chinese government threatening to bring in the army to suppress the unrest. The U.S. has warned China over the violence, and pro-democracy candidates did extremely well in district elections. Still, these developments are not expected to affect the trade talks. On Monday, a Chinese government newspaper said that the two countries were “moving closer” to clinching an interim trade deal.
Has U.S. Manufacturing Turned the Corner?
Last week wrapped up with ISM Manufacturing PMI, a key gauge of the health of the manufacturing sector. The news was positive, as the PMI accelerated for a third successive month, rising from 51.5 to 52.2 pts. This points to a slight expansion in manufacturing. After months of stagnation, we could be seeing a rebound in manufacturing, which would translate into increased demand and higher oil prices.
The line of 58.15 remains fluid – currently, it is an immediate resistance line. With crude on an upward trend, this line could break shortly. 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, we find support at 57.50. Note that the 200-EMA and 50-EMA lines remain relevant. The 200-EMA is currently at 57.01 and is closely followed by the 50-EMA at 56.20.