Daily Market Recap –USOIL The price of a barrel returns to test major resistance at $80

Oil prices have been recovering since midday Thursday after falling the day before following Putin's comments and the second unexpected rise in U.S. oil inventories.

The price of a barrel of WTI rose to its highest level of the week on Friday morning, slightly below the symbolic threshold of 80 dollars. While supply tensions remain considerable, especially with the OPEC+ production freeze and Hurricane Ida damage in the Gulf of Mexico, oil prices may pull back due to the appearance of excessive investor speculation.

Indeed, investors seem to have overestimated the supply pressures of energy commodities such as coal and gas. Although they remain in uptrends, prices for both commodities have fallen in recent days, suggesting that they may be in the process of a bearish reversal.

If this is the case, the downturn in energy prices should also affect oil, which has benefited to some extent from tensions in power generation. Conversely, if the energy situation is ultimately more serious than market participants currently expect, prices for these energies should continue to rise.

From a technical perspective, the price of a barrel of WTI seems to have some difficulty breaking through the symbolic $80 mark in the short term. WTI is beginning to fall below this resistance for the second time this week. If this decline continues, the price of a barrel could return to test its old 2018 and summer highs around $77, which were breached earlier this month.

However, it will be Fridays low of $78.66 that will be the first major support to watch. A pullback below this level would form a “double top” reversal pattern, which would pave the way for a wider retracement to the symbolic $70 level.

Sellers should look toward any weakness in the price during the run-up to the $80 mark as an indication of a potential swing in the offing. Should this scenario prevail, traders may look conservatively short for a target of $77 in the near term.

 (Chart Source: Tradingview 10.10.2021)

The bearish outlook would obviously be invalidated in the event of a rebound above $80. In this case, a continuation of the rise towards $85 would be expected.

Support & Resistance Levels:

R3       97.60

R2       84.66

R1       80.00

S1        78.66

S2        75.71

S3        73.00

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.