Oil futures prices have been trading in a relatively tight price range so far this month with the lead month September futures showing a trading range of less than $3 so far in July. The recent increases in demand may begin to wane as the coronavirus outbreak could cause nations that are seeing rising cases to halt or even pull back on the reopening measures, per Charles Schwab.
Key quotes
“OPEC is expected to reduce its production cuts by about 2 million barrels per day to 7.7 million barrels per day starting August 1. However, OPEC has cautioned that oil demand could fall if the next wave of the coronavirus outbreak is not contained.”
“Looking at the daily chart for September 2020 Crude Oil futures (CLU20), we notice the market forming a rising wedge formation that began in early June. This chart pattern is generally considered a bearish formation but confirmation of a breakdown in prices from the pattern is needed for confirmation.”
“We note a bearish divergence in the 14-day RSI as this momentum indicator has been trending lower despite a moderate up-move in prices overall.”
“The March 6 chart ‘gap’ at 42.49 remains unfilled and looks to be the next major resistance level for the September futures. Chart support is seen at the 50-day moving average, currently near the 34.64 price level.”
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