What is our trading focus?
OILUKNOV20 – Brent Crude Oil (November)
OILUSOCT20 – WTI Crude Oil (October)
WTI Crude Oil (OILUSOCT20) and Brent Crude Oil (OILUKNOV20) have both managed to find support following their recent sharp correction and break below the trend that had prevailed since June. Upbeat economic data from China and the U.S. the world's biggest consumers, tropical storms building across the Atlantic and a recovery in U.S. megacap stocks have all helped drive renewed risk appetite.
After briefly dipping below the 100-day moving average, Brent crude oil on several consecutive days managed to bounce from an area below $39.50/b. Using Fibonacci retracement as a guide to where resistance may emerge we are focusing on $42/b (38.2% retracement) followed by $43/b (50%.
However, as the pandemic continue to slow the recovery in fuel demand, the upside potential in our opinion is likely to remain limited over the coming months. With that in mind and given the risk of increased production from Libya, we see Brent crude oil settling into a new lower range around $40/b before eventually moving higher into year end and 2021.