Oil prices are traded mainly bearish this Monday. Concerns about the prospects for economic growth are driving the bearish sentiment on the oil market.
The price of crude oil falls by 0.36%, or 31 cents, to $ 53.31 per barrel, while Brent oil drops 0.47 cents or 0.83%, descending to $ 58.80 per barrel.
The alliance of OPEC member countries, Russia and other oil producers, known as OPEC+, agreed to reduce supply in December. The agreement considers reducing the supply by 1.2 million barrels per day (BPD) since the beginning of 2019.
However, Russia, the world's second-largest oil producer, reported that it did not comply with this supply reduction agreement in September.
On the other hand, the slowdown in China's growth of 6%, the lowest level recorded in more than 27 years, has sown doubts among investors.
Technical overview
Crude oil price in the 8-hour timeframe illustrates a corrective structure in progress.
Currently, WTI develops a consolidation from the bearish sequence started on the September high at $63.13 per barrel. The sharp decline developed by Crude oil suggests that corrective structure could be a triangle pattern.
From the corrective structure, we observe that Crude oil progress in a wave ((c)) of minute degree, labeled in black. This move runs inside a segment B of minor degree identified in red color.
The current short-term structure calls for a limited decline with a potential target between $52.20 and $51.70 per barrel.
However, a bounce is not out of bounds, probably to the area between $54.50 and $55.20. Once Crude oil completes this segment, the energy commodity has two options.
The first scenario is for the Crude oil to make a wave (5) of Intermediate degree labeled in blue degree. The drop expected could pierce the $49.50 zone.
The alternative count considers the bounce on the $51.50 zone. This bounce could drive to the price until the $55.30 region. In both scenarios, the invalidation level is at $57.56 per barrel.
From the latest CFTC report, institutional traders informed an increase in the bearish bias. Institutions increased their short positions by 7.98% against the rise by 3.01% on the bullish side.
The percentage on the long-side was reduced from 75.90% to 74.92% in the last week.
In consequence, we expect a week controlled by the bearish sentiment. The control level to keep in view is at $51.50 per barrel.
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