Crude oil was 1% lower on Friday as the virus surge and lockdowns in Europe dampened hopes for a speedy recovery. A dip in the U.S. dollar today did little to boost the price of oil after a strong week for the greenback.
Crude has tumbled this week from a high of $39.80 to test the $35.00 level. Wednesday’s inventories release from the U.S. Energy Information Administration saw stockpiles build after a surge in production. U.S. inventories rose by 4.2 million last week, which was the largest build since July.
The recent events are a dilemma for OPEC after the group had planned to increase supply in January 2021. The move would’ve unwound a period of harsh production cuts but the new lockdowns in Europe are a blow to the recovery theme. Alongside increased supply in the U.S., Libya has also restarted its largest field and analysts expect the country to rebound to 1 million barrels per day in the weeks ahead. Libya’s production had been shut down after fighting between rival factions but a ceasefire has recently been signed.
The next path for oil could be determined by the U.S. election, which will likely bring volatility to the U.S. dollar. Both candidates for the Presidency also have different views on the industry with President Trump seeking to solidify energy independence while some see Joe Biden as being a threat to the oil patch due to the green agenda.
Crude Oil Technical Outlook
The weekly chart on crude smooths out the recent noise and we can see a failure at the removing average and sharp drop through support. The $37.20 level will now become resistance and traders could short a retest of that level. The Investing Cube team is currently available to help all levels of traders with the Forex Trading Course or one-to-one coaching.