Crude oil bulls had a brilliant day on Thursday, with the oil complex posting strong gains. Brent crude finished at $64.83while WTI closed at $57.66.
With the market sailing above the 100-day MA last week, a review of the continuation chart gives a perspective on what the bulls might be targeting in the longer term. Remember, back to Thanksgiving. Crude oil hovered at $72/bbl and Brent at $76/bbl. While I sat and watched my Eagles blowout the Cowboys, OPEC decided to blow out any remaining crude bulls as they opted not to cut production. This event triggered an additional $25-$30 washout that eventually ended earlier this year, as we know. This cataclysmic event for crude oil bulls and producers is ingrained in their memory. As well, this area where we dropped from is now roughly where the 200 day MA currently lies. A move back to levels somewhere in this range would be a victory for the bulls and bring some harmony back between producers and end users.
The timing of this move for the bulls is what is unknown. Thursday’s action broke thru the highs from last week and opens the door for further upside. However, one troubling scenario for bulls hoping for a continuation of this recent move is the gap left on the Brent continuation chart as depicted in the chart below. At some point, this gap will likely be filled. A fill of this gap will still keep the market above the 100 day MA so it is not out the question considering the volatility we have been seeing.
The Durable Goods Report will be released Friday morning 8:30 EST. Look for choppy trade after the news as traders wind down for the week. On Friday, resistance will be found at 6574, 6666, and 6866 for Brent and 5852, 5938, and 6121 for WTI. Support lies at 6374, 6266, and 6066 for Brent and 5669, 5572, and 5389 for WTI.
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