Crude oil price is trading lower on the day after reports of a ceasefire hit the newswires. The WTI variant of crude oil has been able to close the upside gap that occurred after weekend reports of the shutdown of two oil fields in Libya. As at the time of filing this piece, WTI was trading at 58.64, about % lower from intraday highs seen at 59.61.
Prices had raged above 59.50 with an upside gap during the Asian trading session as Libyan state media reported that one of the military factions in the conflict raging in that country had knocked off a pipeline, which triggered concerns of possible disruption of supplies. However, a ceasefire announcement in Berlin after the major factions reached an agreement to allow a peaceful resolution of the crisis is now in effect and has calmed the markets.
Recall that in 2011, the outbreak of the Libyan civil war which eventually led to the death of long-time leader Muammar Ghadafi caused oil prices to jump from less than $14 a barrel to more than $120 per barrel.
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Technical Outlook for WTI Crude Oil
The main talking points on the daily chart of crude oil remains the rising channel which covers the price activity from October 2019 to date, as well as the intervening support and resistance levels.
The closure of the upside gap brings crude oil price on the WTI back to the 58.73 resistance, which is where the December 2019 lows nestle with the previous highs of July 31, September 10 and November 22 2019. Price continues to trade within the channel after last week’s bounce from the channel’s trendline.
If crude oil price bounces on the present support, it could get added momentum to push towards the next resistance level at 60.75 (previous highs of March 14, 2019, and July 11, 2019). Only a break of this level to the upside would allow WTI to test the channel’s return line. A break of the channel to the upside targets 63.47 and 64.68.
On the flip side, a breakdown of the current support brings the channel’s trendline into focus. A breakdown of the channel’s trendline would then target 55.65 and 54.15 (previous neckline of June/July 2019 double bottom), in that order.
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