Crude Oil Price Spikes on Equinor Strike – Is this a Dead Cat Bounce?
Crude oil price is rising today as investors react to news about Donald Trump health and a strike in Norway. The price of Brent is up by 1.78% and is trading at $39.97 while West Texas Intermediate (WTI) has gained by 2% to $37.80.
On Friday, the price of crude oil cratered as investors reacted to news that Donald Trump had acquired the coronavirus. The decline was part of the broad sell-off in the financial market. It was also partly because of the overall strong dollar. Today, the price is rising because of the weaker greenback and the increasing probability that the president will move from the hospital.
In addition, crude oil price is falling as investors react to news that Equinor, a Norwegian company has shut down some of its production in the Northern Sea because of workers’ strike. According to Reuters, the strike will reduce the supply by about 300,000 barrels per day.
However, there are several risks to the rebounding prices. For example, in Libya, the amount of production has continued to rise. The country’s production has increased by more than 270k barrels a day and is expected to continue rising.
Also, in the United States, the production could continue rising as drillers continue to restart their wells. According to Baker Hughes, the drillers increased their rigs by 5 to 266. That was the first three consecutive week of increases since 2018. Also, there is a possibility that Equinor will reach an agreement with its workers.
Brent crude oil price technical outlook
The daily chart shows that Brent crude oil price is rising today after it recorded two consecutive days of declines. The price is trading at $39.97, which is a few points below the important resistance level of $40.
The price remains below the 25-day EMA and is between the 38.2% and 50% Fibonacci retracement level. Also, it is along an important support level because, as you can see, the price failed to move below this level in September.
Therefore, I suspect that the price will continue falling as bears target the next support at $35.0. On the flip side, if the price moves above the 25-day EMA at $41, it will invalidate this trend.