Crude Oil Continues to Find Buyers

Kate Leaman
Kate Leaman

5 November 2019

3 min read

  • Trading at the top of thirty-day volume profile
  • Breaking above $57
  • Longer-term consolidation with bullish pressure

The West Texas Intermediate Crude Oil market has opened up the Wednesday session showing signs of strength again, as the market has continued to find buyers on dips. Looking at the volume profile over the last 30 days, we are above the point of control, which is at the $53.50 level.

Now it’s quite possibly getting ready to build another one at loftier levels, somewhere near the $55.90 level. Because of this, the fact that more volume is being created at higher levels suggests that traders are willing to step up and pay for more in this market. Simply put, a rising point of control is bullish, while a shrinking point of control is negative.

Technical analysis

WTI Crude Oil Dec. 18 contract

The technical analysis for the WTI Crude Oil market is rather bullish lately. The intraday point of control has been rising over time as well, shown by the yellow lines on the volume profile for each session. On the 30-minute chart, it’s easy to see that the market has rather consistently reached above the VWap, or volume average weighted price, which is a short-term trading indicator. This also shows that traders are willing to “step up” to purchase contracts.

if the price were to break down below there, you could see a quick move down to $54

Underneath, it looks as if the $56 level has quite a bit of volume done in that range, and that should translate to support. This isn’t to say that the market can’t break down below there, but as the volume profile on the right-hand side of the chart suggests, there is a large spike in volume done over the last 30 days.

If we were to break down below there, you can see that the volume drops off considerably until about $54. In other words, if the price were to break down below there, you could see a quick move down to $54.

To the upside, there is the psychologically important $60 level, which also has the 200-day EMA floating around that general vicinity.

However, it looks as if traders are more than comfortable buying dips in the short term, even with the daily inventory number coming. Quite frankly, if the market does drop from here, it’s very likely that there will be buyers below on some type of massive sell-off.

OPEC and the supply/demand ratio

It is suspected that OPEC will cut production during its December meeting, which is part of what the market has been doing recently, front-running that announcement. That being said, there is a serious lack of demand in the world, so the production cuts will be somewhat limited as far as efficacy is concerned.

Going forward, the market is very likely going to stay within the larger consolidation range between the $50 level on the bottom and the $60 level on the top. In the short term, though, it certainly looks as if traders are willing to step in and bet on higher prices.

Kate Leaman
Written By
Kate Leaman

With over 10 years experience as a trade news writer, Kate is our FX and commodities expert. Kate is also a talented voice over artist and BBC TV presenter, mother of two and yoga fan.

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