Crude oil price jumped higher at the start of this week’s trading as Libya’s civil war escalated. WTI crude oil CFD opened higher today at $59.22 from where it closed on Friday at $58.74, incurring a weekend gap.
Libya’s civil war has been going on since 2011. Over the weekend, the country’s largest oilfield was shut down by the militia men. It is said that they were ordered by rogue Libyan general commander, Khalifa Haftar. He leads the faction that is trying to unseat the current, UN-backed government led by Prime Minister Fayez al-Sarraj.
Haftar has stopped oil exports coming from areas which he controls. On Sunday, Russia, Turkey, Germany, and other countries gathered along with the two leaders to try and work out a peace plan. Aside from a promise that they would send representatives to Geneva for negotiations, there has been no word about when Libya can resume its oil exports.
The country produces about 102 million barrels of oil per day and sells most of its oil to Europe. It is said that a sustained closure of ports will create a deficit of around 800,000 barrels per day. Consequently, it could lead to further lead to higher oil prices.
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Crude Oil Price Outlook
Crude oil price has dropped over $8 since January 8. WTI crude oil CFD on the daily chart looks to have found support at the 100 SMA and 200 SMA. With the weekend gap, the commodity looks to have pulled back some of its losses to the broken trend line which may now provide it with resistance. Drawing the Fibonacci retracement tool from the high of January 8 to last week’s low, we can see that the commodity has also retraced some of its losses to the 23.6% Fib level. A reversal candle around its current price, just above the $59.00 handle, could mean that crude oil price may soon resume its slide. Near-term support is at $57.40 where the 100 SMA and 200 SMA coincide. However, a close below this level could mean that the commodity may soon drop to its November lows at $55.00.
On the other hand, a bullish close above the 23.6% Fib level may indicate that crude oil price could trade all the way up to the $65.00 handle.