WTI crude oil price scored its largest daily gain for 2020 yesterday on optimism that OPEC would announce production cuts this week. WTI crude oil CFDs opened the day at 43.62 and closed at 47.33.
The Organization of Petroleum Exporting Countries (OPEC) is set to meet in Vienna on March 5 to 6. Market participants are expecting additional and/or longer duration of cuts to be announced. Consequently, the lower supply is expected to be bullish for the commodity.
Meanwhile, on the demand side, oil also found bids on speculations that major central banks would cut rates to stimulate growth. The RBA already announced a 25 basis point-rate cut earlier today. It is expected that the BOC would follow later this week. A concerted effort by central banks to ease monetary policy is expected to help encourage economic activity in the midst of coronavirus concerns.
On the hourly time frame, we can see that WTI crude oil price CFDs has already broken through resistance at the 100 SMA. It is also trading above the falling trend line from connecting the highs of February 20, February 21, February 25, and February 26. WTI crude oil price is trending slightly lower at the start of today’s session but it could bounce off support around the 47.00 handle soon. This price provides a confluence of support with the broken trend line, 100 SMA, and 38.2% Fib level (drawing the Fibonacci retracement tool from the low of February 2 to today’s high). Reversal candlesticks around this price could mean that the commodity may soon trade higher. Conversely, a bearish close below 47.00 could mean that it could still drop to 43.33.
The daily time frame suggests that any upward movement on WTI crude oil price could be limited to the 50.00 handle. By connecting the highs of January 6 and February 21, we can see the trend line fall along this price. Additionally, it also coincides with the 61.8% Fib level when you draw the Fibonacci retracement tool from the high of February 20 to the low of March 2.More content