Oil Recovers From Losses – Will Trump Be The Favourite For Oil Prices?
Crude oil prices ticked higher on Wednesday, recovering from initial fall after U.S. election result which called for a victory for Republican Party nominee Donald Trump.
U.S. oil prices fell almost 4% to as low as $43.05 per barrel in Asian trading hours before bouncing back to trade around $44.85 per barrel at the time of writing.
Weekly report from the Energy Information Administration on Wednesday was mixed as it showed a larger-than-expected rise in crude oil inventories but pointed to a decline in gasoline and distillate fuel stockpiles.
Data from the U.S. EIA indicated that domestic crude supplies rose by 2.4 million barrels, while distillate fuel stocks were down 1.9 million barrels in the week ended Nov. 4. Reports from oil-field service company Baker Hughes Inc. last Friday showed U.S. oil production continued to rise as drillers add more rigs to the nation’s fields. The number of rigs drilling for oil in the U.S. rose by nine in the past week to 450.
The surprising U.S. election result sparked a flight from risky assets in Asian trade, which prompted traders from oil investments to find shelters at traditional havens such as gold or Japanese Yen. However, the fact that Donald had pledged to ease regulations that weighed on coal and petroleum sectors. In his presidential campaign, Trump had also promised to review a deal to lift sanctions on oil-rich Iran, while criticized Obama for participating in global efforts to curb climate change.
Fig: WTI D1 Technical Chart
Crude prices pulled back from the 43.05 threshold where it also had to crawled back on twice since the start of September. As can be indicated by the RSI chart, the market rebounded near the oversold zone. The price is heading upwards but a resistance at 23.6% Fibonacci retracement is within the sight and may cause the price action to go sideways or retreat, as the market is still in the bearish zone.
Buy Limit at 45.35, take profit at 46.00, stop loss at 45.00