Crude oil prices started the new week under modest pressure but was able to gain traction in the last few hours of yesterday’s session with the barrel of WTI extending its winning streak into a third straight trading day. Although the dismal global economic outlook and concerns over its negative impact on the energy demand make it difficult for crude oil to rise sharply, OPEC and its allies continue to voice their commitment to balance the oil market by reducing supply. Meanwhile, Moody's yesterday in a report noted that the United States' increasing tariffs on Chinese imports were raising the prospect of a slower economic expansion in 2020 both for the US and China. Similarly, Germany's IFO Economic Institute in its quarterly survey said the economic outlook has deteriorated worldwide amid the escalating trade dispute between the US and China. Later this week, industrial production data and retail sales data from China on Wednesday will be watched closely as well as the American Petroleum Institute's and the Energy Information Administration's weekly crude oil stock reports.
Crude oil prices headed towards the $53.89 support level first as expected during yesterday’s session and then rallied back up towards the $55 level to challenge the trend line presented on the chart but failed to keep the pressure. The price is currently trading just above the $54.42 support level with the momentum turning into neutral. We will focus on the downside and the level to watch will be $53.26 support level.
Support: 54.42/ 53.89
Resistance: 55.6/ 55.73