• Crude futures remained rangebound over the past week as the lack of apparent catalysts forced market participants to adopt a wait-and-see approach.
  • At the start of the week, the market has quickly reacted to OPEC’s confirmation that output hikes will be extended for the month of July as well, with bulls driving the commodity’s price north to the $63 per barrel level, since the decision matched expectations which were already priced in late last week.
  • Speaking of OPEC, speculatory reports hint that the head of the cartel, Saudi Arabia, purportedly plans to push members of the alliance to boost output by at least 411k barrels per day in August and possibly September as well, to capture a larger market share during the summer period, which should this scenario come to fruition it would reasonably create downward pressure for the price of the commodity, due to oversupply reasons.
  • Lastly, US crude oil inventories data added a slight bullish tilt to WTI price this week as both API and EIA reported larger than expected drawdowns, signalling a rise in demand over the past week.

Technical Analysis of Oil

WTI Chart – Negative momentum drives WTI prices closer to fresh 4 year lows

EUR/USD chart displaying a bullish trend with upward movement indicated by green lines and arrows.
  • Resistance:  63.60 (R1), 67.00 (R2), 71.50 (R3)
  • Support: 60.00 (S1), 55.15 (S2), 52.50 (S3)

WTI futures stayed stuck between $60 (S1) and $63.60 (R1) bounds over the past week as neither the bulls nor the bears took control of the direction of the commodity. Given the lack of any market moving developments, we maintain our bias in favour for the prolongment of a sideway scenario, awaiting for a catalyst. Supporting the case is the RSI indicator which has relatively speaking flatlined around the 50 level signalling textbook indecision, alongside the lack of momentum broadcasted by the ADX indicator and the tangled +DI and -DI lines, showcasing lack of either buying or selling pressure.

Should the bears take control of the direction with strong momentum on their side, we would reasonably expect to see a break below the $60.00 (S1) support base and the fall of the commodity towards the $55.15 (S2) support area. Should on the other hand the bulls find enough strength, we would reasonably expect to see WTI retesting and breaking definitively the $63.60 (R1) resistance level and climb towards the $67.00 (R2) resistance barrier.