WTI finished sharply lower last week as demand concerns overtook worries about a supply disruption in the Middle East. Looking ahead, traders will be watching developments in the Middle East between the UK and Iran, however, we’re not likely to see an extended rally unless military action is taken , leading subsequently to a supply disruption. This morning, Iran warned that the fate of a UK-flagged tanker it seized in the Gulf depends on an investigation, as Britain prepared for an emergency security meeting on Tehran's action. London has warned its ships to avoid the Strait of Hormuz, a strategic point for about a third of the world's sea-borne oil.
Crude oil closed above its opening price on Friday, crossing back above the 20-period moving average, after recovering from early selling pressure. During the whole day, prices traded within the previous day's range, unable to cross above the prior day's high or below the previous day's low. However, the technical support level at $55 seem to be attracting buyers for now, and therefore a slight correction upward is likely in the short-term. The trend, however, is still bearish for the medium to long-term, and selling might speed up should prices move below that key important support level at $55 where further sell stops could get activated.
Support: 55.00 / 51.50
Resistance: 58.25/ 59.99