WTI Crude Oil Reaches Double Top

This morning was a bit sluggish for the commodity market. Volatility above 1% wass exceeded only by natural gas, silver and CO2 emission contracts. All these markets were trading higher. Downward movements are even more limited. The price of oil is also increasing, although the upward movement is negligible. On Friday, the price reached new highs during an ongoing pandemic. WTI oil returned for a moment above USD 40 per barrel, but at the same time the price did not manage to break significantly above the recent local highs, which may indicate a potential double top formation. What should you pay attention to?

• The double peak is located around USD 40 per barrel
• The neck line can be found at 34.3 USD per barrel and it is also the range of the largest downward correction in the current upward trend
• At 41.2 USD there is an upper limit of the bear market gap from the beginning of March (strong resistance)
• The number of oil rigs in the US is declining further, but the number of faction teams is increasing. A slow recovery is seen in the US shale sector
• Asia reports considerable demand for US oil due to OPEC reduction in exports - possible spread tightening
• US gasoline demand highest since the beginning of the pandemic (mid-March)
• Current levels are historical cost-effective limit of production for some economies, which may again stimulate supply
• A half-year backwardation has appeared on Brent oil, the curve for WTI is now very flat

The current oil price is theoretically at a very attractive level for sellers. We have a potential double peak (the theory says that we have confirmation once the price break below  the neck line ), in addition, we also observe resistance in the form of an upper limit of the bear market gap. However, market sentiment is currently really optimistic, which is why there is a high probability of breaking above the mentioned resistance at around USD 41.2 per barrel, even before a potential deeper correction. Source: xStation5