WTI crude upside attempts fail ahead of the $63.00 area
|announced
- Oil prices recovery remains capped below the $.63.00 area.
- Saudi Arabia has cut Oil prices to Asia, amid expectations for lower demand.
- The uncertain global trade and the soft outlook of the world's leading economies are adding pressure on prices.
Crude Oil posts moderate gains for the second consecutive day on Tuesday. Optimism about the OPEC+ decision to slow down output hikes from October has provided some support for the commodity, although it remains unable to put a significant distance from last week’s lows below $62.00.
News that Saudi Arabia is planning to cut Oil prices to Asia, amid expectations of a weaker demand, has resurfaced concerns about a softer global demand for crude. The global trade uncertainty and the softer economic outlook of the world’s major economies suggest that the energy demand will decline in the near term, which has offset the enthusiasm for the moderate supply hikes announced over the weekend.
Technical analysis: Correcting higher in a broader bearish trend
The recent Crude recovery is seen as a bullish correction, following a more than 5% decline over the previous three trading days. Technical indicators are mixed, with the 4-Hour RSI still at bearish levels, but with the MACD showing an embryonic recovery.
Oil prices should extend beyond the $63.30 area (Sept 4 high)l to confirm a deeper recovery and aim for the September 2 high, at $65.65. A Break above here would activate a Double Bottom pattern at the $61.20-61.30 area, with its measured target near July’s peak, at $70.00.
A bearish reaction would bring the $61.20 (September 5 low) back to the focus, ahead of the $60.00 psychological level and the May 30 low, at $59.50.
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