- WTI declined from Monday’s highs at $57.17 and trades at $56.58 at the time of writing, up from $56.12 lows.
- WTI prices are in a bullish set-up according to the 4hr Ichimoku Cloud with criteria met for a long position targetting 57.85/93 double-tops, riding the bullish support line est.11th Feb.
Oil prices were on the rise at the start of the week following the optimism around the Organization of the Petroleum Exporting Countries and their allies that have continued to cut back on production levels. However, waning stock prices were a weight when Us stocks fell off a cliff yesterday as non-committed speculators bailed ahead of the Chinese announcements in Asia that could have gone either way. There is an underbelly of huge uncertainty surrounding global growth and China is at the top of a list of headwinds that investors are fearful of.
As a result, Oil futures turned lower on Tuesday, and spot prices are consolidating. The news that Libya has reopened its largest oil field, likely increasing the oil production of Libya by more than 300,000 barrels per day, hasn’t helped the fundamentals either and markets will want to see OPEC cutting production again as a backstop. China lowered its economic growth forecast for the year last night from 6.5% to a range of between 6-6.5% which will likely diminish demand for energy. On the flipside, however, the Chinese also announced a number of stimulus measures such as tax cuts and monetary policy cuts that will hopefully support the economy and drive up demand and oil prices.
The price is climbing along a trend line support est.11th Feb. down in the 51 handle and again around 55.56 at the start of this month. The daily Ichimoku Cloud is not quite bullish enough as the price moves into a phase of consolidation and any long entries at this juncture should be protected with well-positioned stop losses (38.2% Fibo is located at 55.58 for instance, acting as a support structure for this month so far – confluence with the daily cloud top) until the Lagging Span breaks above the cloud top and Senkou Span B.
However, the 4hr outlook has met all the criteria and needs a break and close above prior trend-line resistance at 57.20 with an upside target of the recent tops of 57.85/93 double-tops:
1. Price must close above the Cloud.
2. Cloud ahead must be bullish.
3. Conversion Line is greater than the Base Line.
4. Lagging Span is greater than or crosses above the cloud.