Oil Price Fundamental Daily Forecast – Showing Positive Response to Stock Market Recovery

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading higher early Monday in reaction to a recovery in U.S. equity markets and a successful test of a key support area on Friday.

At 0930 GMT, March WTI crude oil is trading $60.59, up $1.39 or 2.33%. April Brent crude oil is at $64.19, up $1.40 or +2.23%.

Traders are responding today to strong gains in the Asian stock markets and to U.S. futures pre-opening trading. However, there are still lingering concerns over rising U.S. production which is undermining efforts by OPEC and Russia to tighten the global supply and stabilize prices.

Today’s recovery is also a sign that Friday’s sell-off may have been overdone. On Friday, crude oil plunged to its lowest level since mid-December after General Electric’s Baker Hughes reported that U.S. Energy companies added 26 oil rigs looking for new production last week, bringing the count to 791, the highest since April 2015.

Forecast

WTI crude oil is set to begin today’s regular trading session inside a retracement zone at $61.37 to $60.12. Trader reaction to this zone will set the tone of the market this week. If the rally continues then look for a drive though $61.37 into at least $62.19 to $63.16.

Further weakness will develop on a sustained move under $58.07.

Brent crude oil is also bouncing higher early Monday. The first objective is a key retracement zone at $64.91 to $66.03. The short-term objective is $65.89 to $66.86.

Combining the two retracement zones makes $65.89 to $66.03 the best upside target.

Due to the lack of fresh fundamental news, it looks as if the price action today will be controlled by the movement in the stock market. A continued recovery in the equities markets is likely to lend support to crude oil.