The Oil benchmark flashed a week-start spike reacting to the recent news that Yemeni rebels have warned of another attack on Saudi Arabia. Also, the reaction from the US and Saudi Arabia in the form of an increased military presence in the Middle East and a warning of war respectively offered additional support to the oil bulls. Furthermore, the Wall Street Journal’s expectations that it will take months rather than few weeks, as conveyed by the Saudis earlier last-week, to return to the full production also backed the bulls. Keeping prices in check is the doubts surrounding the US-China trade deal as the recent visit of the Chinese delegates to the US had mixed reactions after the diplomats hastily left and refrained from visiting the US farms despite promising earlier. Overall risk remains to the upside with the expected decline in global oil output due to the Saudi attack and a tensed condition in the region.
Crude oil prices edged lower during Friday’s session as expected before finding support by the $58 level and traveled back to the $59 level as of this morning. The price is currently trading just below the $58.8 resistance level as the range of trading is getting tighter and tighter. We expect a big move ahead to either direction but following the recent bias, we will be keeping an eye on the upside with a probability of breaking above the $59.28 resistance level.
Support: 58.26/ 57.81
Resistance: 58.8/ 59.28