Oil has settled at the bottom of its two-day range in Asia leaving bullish positioning nervous into the weekend.
Oil slipped into wait and see mode overnight as a lack of drivers turned chatter more and more towards OPEC and Non-OPEC’s summit on the 30th November. Brent gave up its meagre gains on Wednesday to close 50 cents down at 61.45. WTI fared somewhat better, closing unchanged from the previous day at 55.25. Neither close will give much comfort to the long oil positioning out there with the technical picture on both contracts showing bearish consolidation implying probable further losses as we head into the weekend.
As the hand-wringing continues, we note the change in sentiment from the previous week. As the rally continued skyward, all the chatter was about the structural shift in oil markets from surplus to deficit. This week has been the opposite with chatter concentrating on supposed increases in shale production and inventories. We continue to view this as noise and the sell-off in oil as a long overdue technical correction following a very large rally in a short space of time.
Brent crude looks precarious this morning, with its current level at 61.45 just above what is a triple bottom daily support at 61.25. A break opens up further losses to the next triple bottom and also trendline support at 60.15 just ahead of the psychological 60.00 region. A daily close below 60.00 would be an ugly technical development, setting the scene for further losses towards long-term support at 57.40.
Brent faces stiff resistance at the 62.25 double top, but a close above there would imply the worst is over and a possible rally to 64.40.
WTI is unchanged at 55.25 with trendline support very near at 55.00. It is followed by support at 54.50 after which the charts show clear air until 52.50. It has resistance at 55.50 and then 56.15, above which would suggest that it has seen the worst of its selloff.
