Crude oil prices rallied by more than 4.5% as bulls made back some lost ground after hitting new lows this week. Just as traders were banking on further sell-offs following an article in Chinese press that stated the Chinese delegation would cut the negotiations short, there was a quick turn around in sentiment when a Bloomberg News reported that the White House could put in place a currency pact and suspend tariff increases that are set to take effect Oct. 15. On top of that, the extended rally this morning was caused by an explosion in an Iranian tanker that has set the National Iranian Oil Company -owned vessel on fire near the Saudi port city of Jeddah. The explosion is said to have caused heavy damages to the vessel and oil is spilling into the Red Sea. The report further added that the reason for the explosion is a terrorist attack.
Crude oil prices rallied by more than 4.5% as of this morning after hitting a low of $52.38 per barrel earlier this week. The price is currently approaching the $55 handle with a bullish momentum, however, the move is getting overextended and we are approaching the overbought territory. We will be focusing on a consolidation for the time being and the level to watch will be the $53.89 support level
Support: 54.42/ 53.89
Resistance: 55.05/ 55.92