JANUARY 2020 THE ROLLERCOASTER MONTH FOR THE OIL MARKET

It is well known in the trading and investment argot that while bulls usually take the stairs, the bears would instead jump out of the window, well January 2020 has been a clear example of this expression. It only took a month to clear three months of gains with the WTI benchmark losing 14$ from its recorded highest high to yesterday’s lowest low.

Technically speaking, only in the intraday chart, it was possible to spot some technical confluences for pullback confirmation, with a bullish divergence in MACD and oversold confirmation with the RSI and Stochastic indicators that created some reversal in the opening of today Friday Asian session. However, in the daily charts, price action was able to get a rejection from a key support level forming a bullish pin bar, with a still strong bearish MACD and Stochastic getting used to the oversold zone. Only in one month, the WTI benchmark broke a steady three-months uprising channel and formed two death-cross. With a price action far and over-extended from the daily moving average, the market should experience a healthy pullback to balance itself.

With tens of millions of people essentially lockdown in China, oil demand expects to take a further hit. The coronavirus continues to send panic waves across the global markets, being the main driver for the sharp drop in oil prices, where now the OPEC+ is trying to get back into the arena with extended and more in-depth cuts in production to create the most needed balance between supply and demand.

Too much panic in the market has taken this selloff too far. January 2020 will be remembered as the longest moth recorded in our contemporary story. Let’s buckle-up, that’s all for our weekly oil market report, hope you enjoy it, and I’ll be back next Friday. Be the market stay with us.