WTI: Bulls stepping in on Chinese whispers, 23.6% fibo retracement supports, for now


  • WTI has found demand at a key support level at the 23.6% fibo retracement of the Oct decline. 
  • WTI is currently trading at 52.04, down from a high of 52.47 and up from a low of 50.87. 

WTI is stablising in the downside correction of the recent recovery highs at 53.54. The EIA, (The U.S. Energy Information Administration ), cut its 2019 Brent oil-price forecast and issued its  2020 views. The EIA cut its previous 2019 price forecast by 0.8% for Brent crude to $60.52 a barrel and said it expects to see an average of $64.76 in 2020, keeping its forecast for West Texas Intermediate crude prices at $54.19 for 2019. The EIA expects to see an average of $60.76 in 2020 and also forecast U.S. crude output of 12.07 million barrels a day this year. Output next year is expected to average 12.86 million barrels a day. 

Elsewhere, there has been some positive sentiment from China. China is countering a run of weak data and has been promising a number of stimulus measures. This support risky asset classes such as oil. The suggested measures have included larger tax cuts and sufficient monetary support. China's PBoC and the MoF alongside a stable CNY overnight (currently at a 5-month high) is supporting risk appetite and the price of oil. 

Much more needed to convince markets

Analysts at TD Securities pointed out, however, that "we will need to see concrete signs of action before markets are convinced, but the comments are in the right direction," analysts at TD Securities argued, "In particular, they are focusing on areas of pressure such as autos, weakness in private companies as well as highlighting prospects for major and broad-based tax cuts." However, the trade data earlier this week were poorer-than expected and have been underlining worries that the country’s economy is locked in a downturn which should be a warning to the bulls.

WTI levels

  • Support levels: 51.30 50.26 49.59 
  • Resistance levels: 52.41 53.01 53.68 

From a technical standpoint, that daily doji had started to play out this week but the downside has been held up at the 23.6% fibo retracement around 50.50. However, a break there should encourage additional speculative shorts as the bulls step aside. Bears can hunt down the psychological 50 figure and then 48.20 as a key confluence support area to target.

 

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