Crude oil prices spiked to their highest levels since September 2019 on Friday. WTI crude oil CFDs traded at $60.42 during the New York session. However, there were not enough buyers to sustain the rally above the $60.00 handle. By the end of last week’s trading, crude oil prices closed at $59.73, 47 cents higher than where it opened for the day.
US-China Phase One Deal
The biggest headline last Friday was the supposed trade deal between the US and China. After months of waiting, US policymakers announced on Friday that a trade one deal had been agreed. Existing tariffs on Chinese goods will be rolled back and additional levies which were set to be implemented last December 15 have been cancelled. As for China, it is said that the country has agreed to buy US products of at least 200 billion USD-worth. US products on energy, manufacturing, and agriculture have been said to be purchased until 2021.
China, on the other hand, has been mum on the said agreement. It has yet to release an official statement regarding the reported deal.
OPEC+ Production Cuts Boost Crude Oil Prices?
Another reason for the supposed spike in crude oil prices above the $60 psychological handle was the production cuts agreed on by OPEC+ (Organization of Petroleum Exporting Countries) members. On December 5, it was agreed that an additional 500,000 barrels per day would be reduced from production until March 2020. It was initially expected that only 300,000 barrels would be cut on a daily basis.
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Crude Oil Price Outlook
On the 4-hour time frame of WTI crude oil CFDs, we can see that the commodity is testing resistance at the top of the channel. Crude oil prices have been trending higher. This evidenced by the rising channel that you get when you connect the commodity’s higher highs and higher lows since October 1, 2019. Reversal candles at the top of the channel could suggest that the bullish rally may soon come to a stop. If this proves to be true, we may soon see crude oil prices track lower to around $56.50. This area coincides with the bottom of the channel. On top of that, the commodity made lows at this level in mid-November.
On the other hand, strong buying pressure could push crude oil prices beyond resistance at the rising channel. A strong close above Friday’s high at $60.42 could mean that the commodity may soon re-test its September highs at $63.32.
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