Despite a monumental deal among oil producers last week, crude oil price is still plunging. At the start of today’s trading, WTI crude oil price dropped to a low of $14.47 per barrel. Meanwhile, WTI crude oil price CFDs bottomed at $16.56 before recouping some of its losses to trade at $17.54.
Last week, oil-producing countries led by the OPEC cartel agreed to reduce production by almost 10 million barrels per day. This marked the end of the oil price war between Russia and Saudi Arabia which began in early March.
The number of barrels rolled back is the biggest in history and had the intention of providing support to crude oil price. However, there are two factors currently weighing down the commodity. First, the spread of the coronavirus has shown no signs of stopping yet. This means that most people will continue to be stuck in their homes in the foreseeable future which implies that demand will be muted. Second, oil producers are running out of space to store oil. There are speculations that oil companies may soon halt production simply because of space.
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WTI Crude Oil Price Outlook
On the 1-hour time frame of WTI crude oil price CFDs, it can be seen that the commodity is trading within a descending channel. This is characterized by the market making lower highs and lower lows. If sellers continue to dominate trading, crude oil price could soon tap new multi-decade lows below $15.00 where the bottom of the channel is. On the other hand, a close above today’s high at $18.66 could invalidate the descending channel. It could suggest that crude oil price may be on its way to near-term resistance at $20.20 where the highs of April 16 coincide with the 100 SMA.
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