Oil Price Fundamental Daily Forecast – Traders Seem Reluctant to Buy Strength

When investors aren’t confident enough to buy strength, it usually means they are waiting for a catalyst. They have probably grown tired of the narrative about the “OPEC-led production cuts underpinning the market” and would probably like to hear some positive news about the progress of U.S.-China trade talks.
James Hyerczyk
Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil futures are trading flat-to-slightly-better early Friday, following yesterday’s second potentially bearish technical closing price reversal top in three days. The price action suggests investor uncertainty over domestic and global economic growth on future demand. Nonetheless, the market continues to be supported by the OPEC-led supply cuts and the U.S. sanctions against Iran and Venezuela.

At 07:38 GMT, May WTI crude oil futures are trading $60.03, up $0.05 or +0.10% and June Brent crude oil is at $67.74, up $0.07 or +0.10%.

On Thursday, both WTI and Brent crude oil hit new highs for the year, but both showed little follow-through to the upside when they took out the previous day’s high. In fact, both closed lower which indicates the selling may be greater than the buying at current price levels. The price action suggests investors aren’t willing to buy strength at current levels.

When investors aren’t confident enough to buy strength, it usually means they are waiting for a catalyst. They have probably grown tired of the narrative about the “OPEC-led production cuts underpinning the market” and would probably like to hear some positive news about the progress of U.S.-China trade talks.

Until they get this news, we’re probably going to see a lot of “backing and filling” on the charts as bullish investors are more likely to continue to step in on dips rather than on strength.

For May WTI crude oil, the key level to watch is $59.63 and for Brent, it’s $67.90. These levels are the lines in the sand for the next major moves in crude oil futures. Straddling them will just keep indicating investor indecision.

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