Oil Price Analysis: $40 per barrel has been broken again but there is a lack of conviction at these current levels

• WTI has moved 1.15% higher on Thursday above USD 40 per barrel again.
• The last few sessions have not produced too much volatility.

WTI 4-hour chart

WTI has continued to move higher on Thursday but the price action seems pretty lacklustre despite volatility elsewhere. There have been some decent news stories in the past few sessions as it was confirmed OPEC output reached a two-decade low after over compliance from Saudi Arabia. Also, this week both API and DoE inventory levels produced a draw in inventory levels. 

Usually, any one of these stories would have sent the price higher. This time around it seems USD 40 per barrel is a stubborn zone. Perhaps the price has been capped by the growing concern surrounding the COVID-19 pandemic in the US. 

Looking at the chart now there is a narrowing wedge formation on the 4-hour timeframe. The price is pretty far away from the top of the pattern but if the bottom of the pattern breaks then we could see lower levels in the future. 

The next major support zone is at the red horizontal line at USD 37.20 per barrel. If the support does break it would make a lower high lower low pattern but at the moment the price is still in a technical uptrend. On the topside, the target for the bulls is the orange resistance line at USD 41.64 per barrel. If that level breaks then the uptrend is sure to continue.

Additional levels