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  • Oil is on the backfoot at the start of the week amid concerns over global growth and the US economy now under scrutiny.  
  • WTI is currently trading at $58.91 with a range of between $58.22 and $59.43.

The price of a barrel of oil has been under pressure on recessionary signals and a bearish divergence in US yields whereby the 10-year yield is now below the 3-month bill rate, as well as the Fed funds effective rate of 2.41% – subsequrntly, oil, is trading almost 3% lower since hitting a five-month high last week.

Stocks are troubled by this and sentiment is favouring a risk-off environment of which oil will always struggle within when major global economies are seen to be moving towards a recession which would likely weigh on energy demand.

OPEC to keep oil better bid

However, the  Organization  of the Petroleum Exporting Countries are making an effort to reduce output and the U.S. sanctions on Venezuela and Iran have are likely to underpin the bid. Meanwhile, futures in WTI for May delivery on the New York Mercantile Exchange lost 65 cents, or 1.1%, at $58.39 a barrel but spot prices have traded as low as 58.22 so far, testing the 59 handle again on a correction, albeit a dubious one at that.

WTI levels

However, form a technical basis, the price of oil remains within ascending wedge and above trendline support. Bulls look to the 61.8% Fibo of the Oct 2018 sell-off to late Dec lows at 63.74, reviving prospects for the 70 handle. On the flipside, a drop below 57.70 would target 54.50 and a break there would open a case for 50.50 as the 23.6% Fibo support structure.