USOIL: Oil Prices Continue to Rise Amid Political Turmoils
Market Analysis - Milan Cutkovic | 10 Apr 2019
As Oil prices have reached a fresh 6-month high, traders are wondering what factors are contributing to the commodity´s impressive recovery rally and how far it can go. There are several reasons why USOIL and UKOIL have been rising steadily in recent months:
- Political Developments – Venezuela is still finding itself in a chaotic situation, while Iran is suffering from the consequences of renewed US sanctions. More recently, the violence in Libya has intensified, and the battle for Tripoli continues. The market is expecting that this could have a significant impact on the country´s oil output.
- OPEC – The organization´s oil production continues to decline; according to their latest data, output has fallen to a four-year low. Especially Saudi-Arabia seems to be committed to keep output at lower levels and drain oversupply from the market.
- Economic data – Recent economic data out of the United States and China exceeded expectations, and indicate that the two largest economies of the world are recovering from a recent slowdown. This gives Oil bulls another reason to believe that demand is likely to rise in the short-term.
What are the charts showing?
The hourly chart shows that USOIL managed to bounce off $63.60 support and has recovered since then. The area between $63.40-60 is a key area of support, and Oil bulls would need it to hold for USOIL to sustain its upside momentum in the short-term.
Source: AxiTrader MT4
Looking at the Daily chart, the RSI is currently in overbought territory. Some traders might see this as signal that a healthy correction is needed before the commodity is able to extend gains. Another signal that Oil bulls are waiting for is the crossover of the 21 DMA (green line) and 200 DMA (blue line). To the topside, the next significant level of resistance lies at $67.90.
Source: AxiTrader MT4
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