The crude oil price benchmarks of Brent and WTI jumped on Monday after comments from Iranian Oil Minister Zanganeh hinted that he believed OPEC would cut production quotas at its December 5/6 meeting.
WTI crude is currently trading at 56.74 on the back of these comments. WTI had previously hit an intraday high of 56.99 following a strong push from the previous support levels.
Crude oil price has been under pressure in the last month or two from a variety of bearish fundamentals. Successive downgrades in global crude oil demand by the International Energy Agency (IEA) and the downbeat Chinese manufacturing and GDP data have been the greatest culprits. There is also the matter of the US-China trade war which has been the dominant headline for much of 2019.
However, risk sentiment has improved as a result of the impending Phase 1 agreement signing between the US and China. Marginal improvements in the PMI data of Germany, France and Italy as well as the Iranian oil minister’s statements were enough to give crude oil prices a big boost on Monday.
WTI Crude Technical Outlook
The daily chart showcases the crucial price levels on which crude oil price action on the WTI has been predicated. Price was able to push up from the 55.73 area after Friday’s surge from the 54.40 support price (neckline of June 2019 now in role reversal) broke through that support. This move also represented an upside push from the channel’s trendline.
Price is now testing 56.72, which is the next resistance located at the 38.2% Fibonacci level. A successful upside break of this area could take crude oil price above the channel, where it will target 58.50 (50% Fibonacci level). Dissipation of upside momentum takes WTI down to retest 55.73 and 54.40, in that order.