Today’s message on crude oil is going to be very quick as Nadia Simmons is not able to write the regular issue today due to health concerns.Still, the key part of our previous analysis remains up-to-date. We wrote the following:

”(…) we should keep in mind that the price of black gold is still trading under the red resistance zone (created by the 61.8% Fibonacci retracement, the barrier of $50, the late-November and early-December lows) and the upper border of the blue declining trend channel.

Therefore, in our opinion, higher prices will be more likely and reliable if crude oil breaks above these resistances in the following days. If this is the case and the commodity extends increases from current levels, we’ll likely see an increase to around $53.30-$54.55, where the December peaks are.

(…) slightly above them we can notice the 38.2% Fibonacci retracement based on the entire October-December downward move, which serves as an additional resistance that could encourage oil bears to act once again.

However, (…), if the buyers show weakness in this area and fail to break above the red zone, the price of black gold will likely pull back and test the recent lows and the lower border of the blue consolidation (around $44.35-$44.40) in the near future.”

Today’s intraday high was $51.50 (so far), but at the moment of writing these words, crude oil is trading at $51.13. This is very close to the upper border of the above-mentioned red resistance zone and it’s currently unclear whether it is broken or not (and thus opening a trading position at this time might be premature). We should know more once we have today’s closing prices. And we’ll provide more details in tomorrow’s Oil Trading Alert.

Thank you.

Przemyslaw Radomski, CFA
Editor-in-chief, Gold & Silver Fund Manager