The price of a barrel of oil continues to weaken following a number of fundamentals driving market sentiment. The Commitment of Traders reports show that hedge funds are increasing their short positions and prices are on the verge of a two-week low as traders weigh the various risks associated with the market, stemming from a global slowdown, trade wars, Brexit and the supply side of the equation, with reports that Russia on Sunday said that it failed to comply to its commitments in September to curb production. Additionally, Kuwait and Saudi Arabia seem to be looking to restart production in Khafji and Wafra oil fields that had been shut for four years which would add around 500K barrels a day in crude. However, the downfall was limited as the US and China reportedly made progress on trade negotiations.
Crude oil prices are practically unchanged since yesterday’s session after printing a low of $52.72 before bouncing right back up. The price is currently trading just above the $53.26 support level with the momentum being bullish but refraining to neutral territories. Selling should accelerate should price consolidate below the $53.26 support level where more sell stops could be triggered. We will be focusing on the downside with the $52.5 support level on our watch.
Support: 53.26/ 52.5
Resistance: 53.77/ 54.42