Crude Oil Steady as Investors Look for Clues
Crude oil has started the week quietly. In Monday’s North American session, West Texas Intermediate crude oil futures are trading at $57.54, down $0.33 or 0.54%. Brent crude oil futures are trading at $63.35, down $0.20 or 0.35%. On Friday, crude touched a high of 58.64, its highest level since September 23.
Crude Steadies After Volatile Week
Crude showed sharp swings last week, sustaining sharp losses early in the week, but managed to erase these losses by the end of the week. The catalyst for the extensive up-and-down movement last week was the U.S-China trade talks, as investors continue to hunt for clues as to whether an agreement is close at hand. There has been little news from the trade front, save for some contradictory statements from President Trump about the extent of progress in the current round of talks. Any announcement that the sides are making substantial progress could translate into gains for crude.
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U.S. Manufacturing PMI Beats Estimate
Last week wrapped up with ISM Manufacturing PMI, a key gauge of the health of the manufacturing sector. The news was positive, as the PMI accelerated for a third successive month, rising from 51.5 to 52.2 pts. This points to a slight expansion in manufacturing. Has the manufacturing industry turned the corner after months of stagnation? If manufacturing gains strength, the demand for crude will increase and result in higher oil prices.
Technical Analysis
Crude is currently testing support at 57.50. The 200-EMA is close by, at 56.99. Below, we find support at 56.50. This is followed by the 50-EMA line at 56.10. On the upside, 58.15 is a weak resistance line. Above, there is resistance at 59.30. This line, which has not seen action since mid-September, is protecting the symbolic 60.00 level.
As the trend remains upward, I would not be surprised to see crude rebound and move higher in the next day or two.