Further upside expected in WTI oil

HAVING been stuck within US$42.55 range low and US$55.00 range high for the past 14 months, a breakout to the upside finally occurred for the WTI. Saudi Arabia's anti-corruption purge and the expectations of Opec members still curbing oil production at the end of the November Opec meeting are the prominent catalysts for the recent breakout.

Since June 2017, the bullish rebound off the US$42.55 range low has successfully moved prices into an uptrend to form a series of higher highs (HH) and higher lows (HL). The recent bullish breakout above the US$55.00 range high has also validated the formation of another higher high point within this uptrend which is a bullish sign. Moreover, after the 20-day moving average crossed above the 60-day moving average on July 31, 2017, the uptrend has been firmly supported by the 20 and 60-day moving averages since then shown by the highlighted areas.

Buyers initially faced some trouble breaking above the US$55.00 range high in late October to early November shown by the bearish rejections. Nonetheless, further attempts by the bulls finally broke through the US$55.00 barrier on Nov 3, 2017, and the subsequent bullish follow-through exhibited increasing bullish momentum. Even though there was a marginal correction at the US$57.92 high since Nov 8, 2017, the uptrend formation remains solidly intact as the previous critical psychological resistance area at US$55.00 turned into the current support area. In addition, the US$55.00 support area also coincided with the 20-day moving average making this a stronger support area.