Thanks to US President Donald Trump, WTI crude oil price futures for June delivery were up for a second day in a row and are now trading more than 9.30% higher at $15.07. Meanwhile, CFDs are up by more than 7.00% at $15.37.
The US President tweeted yesterday that the US Navy has been ordered to “shoot and destroy” gunboats by Iran if they threatened US ships. This was bullish for crude oil price because it hints at political instability and could pose a threat to the supply of oil. If you remember, in January, the commodity traded higher on news that a US airstrike killed the prominent Iranian general, Qassem Soleimani. There was widespread concern among market participants that tensions would escalate to an all-out war.
With that said, the recent price action on crude oil price could be nothing more than short-covering. That is, unless, the US and Iran conflict grows or the situation with the coronavirus pandemic significantly improves.
On the 4-hour time frame, it can be seen that WTI crude oil price CFDs has some room to trade higher and still maintain its downtrend. By connecting the highs of April 9 and April 17, it can be seen that trend line resistance is around $11.65. This price also coincides nicely with the 50% Fib level (when you draw from the high of April 17 to the low of April 21). If there are enough buyers to push crude oil price above this confluence of resistance, the next ceiling could be at $19.50.
On the contrary, if what we’re seeing is nothing more than just a short pullback, we could see the commodity fall to its record-lows at $3.42.