As attention remained on equity markets, Oil markets eased on Friday. Brent crude oil price fell by 0.60% to USD55.00 a barrel, while WTI remained unchanged at USD52.15 a barrel.
Late Monday, saw West Texas Intermediate (WTI) trading sharply as crude inventories kept falling. This is coupled with rising winter fuel demand as one of the worst snowstorms hits the U.S Northeast.
Last week, U.S Energy Information Administration report showed a 2.3 million-barrel decline in stockpiles at the Cushing, Oklahoma, futures delivery hub. Citing a Wood Mackenzie report, analysts and traders expect another 2.3 million-barrel weekly decline.
In other news, the U.S. Northeast has been hit by a powerful winter snowstorm, causing widespread disruption in New York City. Other major urban centers in the region are also being affected by the snowstorm.
Moreover, Goldman Sachs forecasting an oil market deficit of 900,000 barrels per day said that prices could rise to $65 by July. This is a higher level than its previous prediction of 500,000 BPD.
According to the daily swing chart, the main trend is up. On Monday the uptrend continued when buyers took out the previous main top at $53.58. It is suggested that a move through $53.94 will reaffirm the uptrend. However, the main trend will change to down on a trade through $51.44.
WTI crude oil is trading at $52.69, putting it in a bullish position.
The subsequent minor range is $47.31 to $53.94. Its 50% level at $50.63 is another potential support level followed by the transient retracement zone at $50.12 to $49.22.
As long as March WTI crude oil futures can sustain a rally over the pivot at $52.69 a rise can be expected. There are chances for the market to continue to rally into the main top at $53.94. However, given the move is able to create enough upside momentum.
The main top at $53.94 will also be a plausible trigger point for an acceleration to the upside. There is plenty of room for the increase – January 8, 2020 main top at $57.41 is likely to be the next target.
On the contrary a sustained move under $52.69 will indicate that the sellers are taking over. This could mean more range bound trading with support coming in at $51.64 to $51.44.
When trade is ranging, there is no trend, and false breakouts and whipsawing price action can be experienced. The price action is accompanied by low trading volumes which makes gauging market direction more difficult.
At this point time, the market is likely to continue to see an irregular behavior. Whether or not there is going to be enough incentive to drive up the demand for crude oil, only time will tell.