Crude oil prices on the Brent variety have been able to shake off the slight drop recorded on Thursday to stay on target at reclaiming the $57 price level. Crude oil price uplift is gaining momentum from hopes on deeper production cuts by OPEC and its partners, collectively known as OPEC+.
Russia had previously withheld firm commitment to the move, but with reports now suggesting that the deeper cuts have the blessing of several Russian oil firms, crude oil price on WTI and Brent has regained upside traction. It is currently trading at $57.01 as at the time of writing.
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Technical Outlook for Crude Oil Price (Brent)
Crude oil prices started the week with a rebound, but the coronavirus outbreak and related fears that it could severely dampen demand continue to constitute significant headwinds to price ascension. Thursday’s initial big drop came as the Chinese government reset diagnostic parameters for the coronavirus outbreak, leading to a substantial increase in the number of cases in the towns which constitute the epicentre of the epidemic. However, markets have shaken off these fears on Friday, and crude oil is well on its way towards the 57.47 price level.
Price action on the daily chart for February shows the “W” pattern. If the 57.47 resistance is broken, this may set the pace for the continuation of price uptick towards 58.69 or possibly 60.26 if the momentum for recovery remains firm. This leg up also confirms the divergence signal that was identified in an earlier analysis for this asset this week.
However, failure to break the 57.47 resistance could allow price to retest the 55.59 resistance-turned-support. Further downside breach of this level brings the crude oil price of Brent towards 53.26, where price may have another chance at forming a trough, which could change the pattern to a triple bottom or an inverse head and shoulders pattern. A lot could still happen in the coming days for Brent crude.