Crude Oil Prices Hover Around 3-month Highs Ahead of Inventories Report

Crude oil prices traded steadily higher after opening at $59.81. WTI crude oil CFDs finished the day just a few cents off of its three-month highs at $60.18.

Optimism on US-China Trade Deal

On Friday, the US announced a phase one deal between the US and China. There were supposed to be additional tariffs due to be implemented last Sunday, December 15. However, they were canceled as the two countries came in to agreement with each other. On top of that, existing tariffs will be rolled back. China, on its part, has agreed to buy up to 200 billion US dollars-worth of energy, agricultural, and manufactured goods until 2021.

UK Elections Help Boost Risk Appetite

Last week, we also heard about the Conservatives securing majority seats in Parliament. This may have contributed to the market’s risk-on mood yesterday. Remember that Brexit has brought about uncertainty for the past three years. After the Tories’ dominant win, market participants think that Prime Minister Boris Johnson will soon be able to pass a Brexit plan.

Crude Oil Inventories Eyed

On Wednesday, the US crude oil inventories report will be due. It is expected to show a deficit of 1.8 million barrels in the week ending on December 13. A lower figure will likely push crude oil prices higher as it indicates that demand for the commodity will soon pick up given that storage supply is low.

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Crude Oil Price Outlook

Zooming out to a year ago, we can see that the crude oil prices may soon face a confluence of resistance around the $61.40 area. For one, the price is near the top of the ascending channel on the daily time frame. There is also a falling trend line in this area when you connect the highs of April 23 and September 16. Reversal candles around this area may suggest that the commodity may soon trade lower to the bottom of the channel around the $57.00 handle. If support here does not hold, crude oil prices have some more room to move lower to the rising trend line at $55.30 (from connecting the lows of December 24, 2018, August 7, 2019, October 16, 2019, and October 31, 2019).

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