OIL : Still Struggling

(Thu, 8 Oct 2020). Oil prices remain volatile as the sentiment-linked commodity swings aggressively in response to changes in trader risk appetite. Crude oil price action has oscillated back and forth between critical technical support and resistance levels over recent trading sessions amid conflicting bullish and bearish headlines.

For example, fiscal stimulus negotiations, in addition to Trump health updates and election speculation, have largely caused markets to whipsaw. Reports of paused crude oil production in the Gulf of Mexico due to Hurricane Delta likely exacerbated a short-squeeze higher by oil prices, but this seems largely priced in now.

Correspondingly, crude oil price action caught a bid off the $37.00-handle over the prior two trading sessions, which was detailed as an area of buoyancy in our weekly oil forecast. The sharp spike by oil prices propelled the commodity 10% higher above the $40.00-mark, but after failing to reclaim the 50-day moving average, selling pressure has since resumed. This brings the 100-DMA back into focus as a potential support level before the September lows come back into focus as a potential downside objectives for crude oil bears.

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