Oil Price Analysis: A new consolidation looks to be forming between $36.43 and $38.68 per barrel

WTI 1-hour chart

WTI has been in freefall for most of the week dropping 5.28% this week following on from last weeks loss of 8.16% drop. There has been a small recovery and now it seems there is a consolidation forming. For the beginning of next week then there is a floor and ceiling level to look out for and a break could be significant for the future trajectory of the commodity. This week's Baker Hughes data shows that roughly the same amount of rigs are only as last week and the trend is now stabilising near this number of 180.

There seems to be more emphasis on the rising production levels of the OPEC+ group and the possibility of more lockdowns. The inventory levels in the US from the American Petroleum Institute (API) and the Department of Energy (DoE) were slightly higher than expectations but not enough to inspire such a sell-off. 

Longer-term, the price is still in an uptrend but this sell-off is confirming the technical trend change. Fundamentally things do not look so good for the bulls and unless the OPEC+ group manage to do another deal or extend the taper agreement so it stretches out there could be more pain to come. It seems more and more likely some of the major economic nations like the UK are experiencing a second wave of COVID-19 infections and this with put more pressure on the price. 

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