Crude oil price started its bullish rally after hitting the critical support at $51.05, low of 3rd October. The bulls were having a tough time in clearing up the major resistance at $58.66. Moreover, a couple of failed attempts from the crude bulls indicated weakness in bullish momentum. Things changed drastically after Prince Abdullaziz bin Salman sated Saudi might continue to under-produce to stabilize the market. Crude oil prices surged higher and secured a new top at $59.84 on 6th December. However, a bearish correction might take place before we see another extended rally from the crude bulls.
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If the bearish correction takes place, Crude oil price might drop towards the 38.2% Fibonacci retracement level at $57.97(drawn from the low of 29th November to high of 6th December). A daily closing of the price below the $57.97 market (38.2 retracement level) might push the crude index towards the 61.8% retracement zone at $56.85.This level might play a crucial role since crude price breaking below this level might result in a retest of medium-term bullish trend line support at $55.75. On the contrary, the recent drop in China’s export is also giving a headache to the optimistic buyers since the demand for oil might fall. So, expecting a bullish rally based on Saudi prince statement might be an immature act. Traders are advised to keep an eye on the key levels for finding favorable trading opportunities.Download our latest quarterly market outlook for our longer-term trade ideas.
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