Crude Oil Price Outlook:
Crude Oil Price at Risk After Trump Squashes Stimulus Hopes
President Trump riled capital markets Tuesday afternoon when he announced an end to covid-related stimulus talks until after the Presidential election. The news sent risk assets like the Dow Jones, Nasdaq 100 and S&P 500 sharply lower. Not to be outdone, crude oil embarked on a pullback of its own, although losses remained modest relative to those seen in US equities.
Still, the sudden shift in risk appetite could undermine crude oil prices in the weeks ahead and the risk of an even slower global economic recovery could exacerbate crude oil’s precarious demand outlook.
Crude Oil Price Chart: 4 – Hour Time Frame (May 2020 – October 2020)
With that in mind, bears may look to probe support in the days ahead should weakness persist. As it stands, the first line of defense may reside around the Fibonacci level at $39.11 which has shown varying levels of influence since June. If it fails, price may look for secondary support starting at the $36.60 mark which coincides with the upper bound of an area that has previously provided some buoyancy.
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Either way, crude oil remains beneath resistance at the $42.00 mark which has kept the commodity contained since June. Since the surprise announcement from President Trump conveniently arrived when price neared the technical barrier, it seems both fundamental and technical forces may play a role in keeping crude beneath the zone this time around. In the meantime, follow @PeterHanksFX on Twitter for updates and analysis.
–Written by Peter Hanks, Strategist for DailyFX.com
Contact and follow Peter on Twitter @PeterHanksFX