Crude oil, which has been balanced in the narrow-band range for more than 2 months, headed for revaluation losses and attracted attention in the markets, In particular, crude oil, which has entered a stable recovery after a major collapse due to the novel coronavirus (Covid-19), has been the subject of sales-oriented transactions again and became one of the hot topics among investors in recent days.
Before giving certain answers to possible questions of the market participants, we would like to remind you the last developments in crude oil. When the coronavirus was declared as a ‘pandemic’ by the World Health Organization (WHO) in March, crude oil declined to $ 8.12 per barrel due to the global demand shock. In April, OPEC+ members gathered under the leadership of Saudi Arabia in order to balance the markets against excessive supply. In this meeting, members made a decision and decided to cut the production by 10 million barrels per day as of May 1.
The decision by OPEC members to cut supplies following the historic collapse in crude oil paved the way for crude oil prices to enter a stable recovery process. However, as the oil storage capacity in the USA continued to increase just before May, this time, we observed strong sales in West Texas Oil (WTI) futures for June, and crude oil spot prices also turned its direction down again and declined to 13.01. After that, the recovery in crude oil, which was eased by downward pressure due to the decision of the final supply cut taken by the OPEC organization, continued to be stable. Spot crude oil, which has balanced within the range of 39.00 – 43.00 since July, started to retreat in September, following the weakening of recovery demand in the last week.
The continuation of the second wave of Covid-19, which started in developed countries such as the USA and Japan, which are the biggest stakeholders of the global industry, continued in the largest economies of Europe and reduced the demand for crude oil under current production conditions and caused the price to ease down in a significant time. Spot crude, which fell below $ 40 a barrel after Saudi Arabia’s oil company Aramco decided to cut prices in October, indicating uncertainty in oil demand, moved its losses to the 5th consecutive trading day, falling 13.8 percent, in line with international credit rating agency Fitch Ratings’ revision of its long-term oil price forecasts.
Technically, after a relatively stable recovery, we saw crude oil prepare for an ascending wedge pattern, narrowing the field of movement. The commodity, which broke the fibonacci 50.0 percent fan line as a result of strong sales that it experienced under the influence of a cumulative squeeze in the wedge, followed a minor decline channel and headed for losses.
As long as the closes continue below the minor trend, which we refer to in terms of maintaining the sales potential in the commodity, the retreats can deepen towards 35.50, 33.35 and 31.20 supports. If the commodity gets above the minor trend with possible purchases in response, the recovery movement may lead the prices towards 39.80, 42.00 and 43.90 resistance levels.
Resistance: 39.80 – 42.00 – 43.90
Support: 35.50 – 33.35 – 31.20