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  • WTI bears are in control despite the move to the upside.
  • The technical bias stays with the bears so long as the current resistance holds.
  • There is a strong confluence of resistance structure, Fibs and technical indicators.

West Texas Intermediate crude oil is trading at $39.51 between a low of 438.53 and a high of $39.81.

The price is trying to recover back to the $40 level following the slide below it on Monday as the covid-19 anxiety mounts.

However, as another major storm weighed on output in the Gulf of Mexico, prices began to stablise, although the concerns of the impact on demand from the ongoing rise in COVID-19 cases are a thorn in the bull’s side.

This is threatening to further disrupt the recovery in demand.

Meanwhile, supply fears have grown with Libya lifting the last remaining force majeure at the El Feel field, analysts at TD Securities explained. 

”In this context, we think it is likely that OPEC+ will be forced to delay their scheduled production increases, as a failure to do so would endanger a fragile rebalancing amid a continued second wave.”

The analysts at TD, however, argue that crude’s right tail remains fat, with all indications from OPEC+ pointing to a likely delay of the scheduled cuts.

”With the prospect of normalizing demand expectations, large-scale fiscal stimulus and a potential vaccine announcement shortly following the election,” the analysts argued that energy markets should have a strong base to move higher into 2021.  

WTI levels

However, for the meanwhile, bears might wish to note that prospects of a continuation of the daily bearish trend and how the 4-hour chart is offering a discount from the resistance of the 61.8% Fibonacci:

Daily chart

4-hour chart

Bearish conditions offer prospects of a downside continuation still, so long as price remains below resistance.