CRUDE OIL MARKET LOOKING FOR DIRECTION

2020 so far has been an exciting year for the crude oil market, recording fresh high in the first week and experiencing a sharp correction immediately after, losing 13% value and finding support above a flattened 200 MA, trading at the 58 handle with no clear direction.

Technically speaking, price action is in a consolidation zone finding support on the 200 DMA and resistance below the 50 EMA, with a bearish MACD in an oversold market by the Stochastic indicator, the price action is totally unbiased. 

The energy market, after the incident in the Middle East and possible disruption about oil supplies, has been coping with lack of direction, where supportive fundamentals, such as OPEC’s commitments to keep price stable, Chinese oil imports strength, recent recovery of the US dollars, and the signing of the US-China Phase-One deal are still waiting to price-in adequately. 

The trade war has caused the pause in the global energy demand; however, the signing of the deal did not bring the immediate response expected as investors did not buy-in. The agony around oversupply in a contracted global economy still permeates the energy sector, where investors are focusing back on real demand and supply fundamentals. 

Still too early to play your cards, better sit tight, and see how the market develops next week before making any bets. With the Chinese New Year right in the corner striking the year of the Rat, being the first animal from the zodiac, and symbolizing intelligence and robust vitality, let us encompass the kind blessings and luck.