Light crude oil reaches January levels

Source: Dukascopy Bank SA


Due to recent events, a review of the technical chart for Light Crude oil has to be conducted. First of all, note the fundamentals, which were published throughout this week.

On Monday, crude oil prices reacted to the oil producing country cartel OPEC+ announcing that they would decrease their output targets by 100,000 barrels per day. Namely, the global supply of oil is going to be reduced. The markets took in the news, as crude prices surged. Brent oil gained nearly 4.00% and Light crude 2.50%.

On Wednesday, despite the OPEC+ production decrease, crude oil price benchmarks eventually started a decline. By the middle of Wednesday's trading, the commodity traded at levels not seen since January. US Light Crude reached the $83.00 mark and UK's Brent Crude oil traded at $89.00. Up to the middle of Thursday, the reason for the move is unknown. Some financial media outlets quote pessimism, but it is clear that it is a scapegoat during periods, when reasons for moves is unknown..

From a technical analysis perspective, the price has passed below the 85.00 mark and the support zone, which was located above it. Next target for the decline could be the late 2021 low level zone at 78.25/80.00. Further below, note the 73.10/74.00 zone, which acted as resistance during September 2021 and December 2021.

On the other hand, a recovery of the price is set to face resistance in the 85.00 mark and the 90.00 level. Note that the 90.00 level is being strengthened by the upper trend line of a channel down pattern.
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