The price of West Texas Intermediate oil is attempting to snap a three-day losing streak after United States President Biden and the President of Egypt Al-Siss managed to broker a truce deal between Israel and Hamas.
Oil has been hit hard over recent days as missile have been repeatedly fired on the Gaza strip. The rising tensions in the geopolitical hotspot raised fears about a literal all-out war in the middle east between Israel and Palestine, and indeed other Arab nations.
Now that a truce has been delivered the price of WTI oil is attempting to move away from the benchmark $62.00 support level. Furthermore, hopes over more US stimulus and easing concerns over rising COVID-19 cases in parts of Asia has boosted sentiment towards riskier assets.
Later today the release of PMI manufacturing data from the American economy is likely to be the next major catalyst for oil prices. Sentiment is improved after yesterday’s upbeat weekly jobs numbers from the US economy.
It is particularly noteworthy that negotiations between the US and Iran in Vienna continue to loom over the market. Reports suggest that Iran is ready to boost oil exports, and they could have economic sanction lifted within 2 to 3 months time. The market is taking the news in its stride right now.
On the technical front, WTI oil has formed bullish divergence, which is providing a warning sign that a recovery could be forthcoming in the near-term. The MACD indicator is highlighting the $66.00 area as a potential bullish target.
Market sentiment towards WTI oil remains bullish, with some 66 percent of traders holding a positive outlook. This large one-way sentiment skew is mildly bearish, and it suggest that crude oil could falter further. Overall, sentiment may need to neutralize before a major recovery can take hold.
WTI Oil Short-Term Technical Analysis
The one-hour time frame shows that WTI oil has formed significant amounts of bullish price divergence across the MACD indicator, following it swift price decline over the last few days.
Watch out for a strong bounce towards the $65.00 to $66.00 resistance level if a recovery starts to unfold. A break under the $62.00 support level could lead to further downside towards the $60.00 price zone.
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WTI Oil Medium-Term Technical Analysis
Looking at the daily time frame WTI oil is testing towards multi-year trendline support, around the $62.00 level. This is a key reversal of breakdown level that traders need to watch over the coming days.
Traders should be aware that a huge bullish reversal pattern, with close to $10.00 of upside potential will form if WTI oil recovers from current levels towards the monthly price high.
Overall, the medium to long-term price picture still looks very bullish for West Texas Intermediate oil, given the technical backdrop and potential for the fundamental story to further improve this and next quarter.
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