Though oil maintained losses on Friday for the seventh consecutive month, prices also started to rise to Monday highs glancing $50.
Analysts and investors are now asking if the market has reached its support level and will be on the up from now on.
Reasons for positive market reaction in terms of lower production and subsequent higher demand:
1. Oil rig counts low at 100 last week in the U.S
2. Oil producers reduce investment programmes by billions of dollars
3. Non-OPEC countries may lower production in line with companies’ reduced output
4. Demand from U.S consumers has not depleted and is still at 9 million barrels a day
Reasons for negative market reaction in terms of global growth and oil glut:
1. IMF forecast on global growth is now cut by 0.3% for the next 2 years
2. U.S domestic production is still rising in terms of the shale industry
3. U.S crude inventories are also increasing by 8.9 million barrels from the previous week to stand at 406.7 million barrels for the week ending January 23, 2015
4. Saudi Arabia has not changed its stance on oil production and will maintain its output of 30 million barrels per day
Monday’s Crude Oil - Day Trading Strategies are as follows:
Bullish scenario: Long positions above the daily pivot point 46.95$ with targets at 49.60$ next 51.00$ in extension.
Alternatively, Bearish scenario: Short positions below the daily pivot point 46.95$ with targets at 45.60$ next 42.90$ in extension.
Monday’s Crude Oil Daily Chart Support and Resistance levels are as follows:
Resistance: 46.55, 49.10, 51.75, 52.50, 53.95
Support: 43.60, 43.20, 42.80
MT4 chart: oil
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