This Oil Price Chart Is Very Important!
Oil Is Back On The Defensive!
After a period of relatively quiet trading in February, bears are once again taking control of West Texas Intermediate (WTI) crude. The commodity lost just over $2 a barrel last Friday to close the session at $45.
What’s going on?
Despite big cutbacks in 2015 capital spending from most US producers, US oil production is still surging.
In fact, for the week of March 6th, US commercial crude inventories rose by 4.5 million barrels. The weekly increase sent total US crude stockpiles to 448.9 million barrels- yet another 80-year high according to the EIA.
Most analysts now agree that US production will keep climbing at least through mid-year before exploration cutbacks finally start taking a toll.
Such bearish information has investors trimming their bullish bets on oil, and bears are adding to their short positions.
With all this information in mind, let’s look at a very important oil price chart.
Oil Price Chart Reveals Something Very Important…
Now that crude is trading back near the 2015 low, we have an essential support zone to watch.
Here it is…
As you can see, WTI is approaching the low set in late January. This level is very important for two reasons:
- Bulls will use the $44-$45 area as a low-risk support level to get long. If the market holds this area, we could have a “double bottom” technical pattern, which will bring more buyers into the market.
- If this support zone doesn’t hold, investors may panic and quickly push oil to $40 a barrel or lower.
What happens at the $45 support area will likely decide the trend of the market for at least the next few weeks, and possibly much longer.
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Until Next Time,
Justin Bennett
BIO: Justin Bennett is the head commodity research analyst at Commoditytradingresearch.com. With over a decade of real world trading experience, he finds ways for you to consistently profit from movements in commodities and the companies producing them. Sign up for our free reports and commodity newsletter at https://commoditytradingresearch.com/free-sign-up.
