Oil prices gained notably on Monday, amid potential supply disruptions. Turkish President Erdogan said he is willing to "close the tap" and cut oil flows from Iraq’s Kurdish region to the rest of the world, after the Iraqi Kurds held an independence referendum. The precious liquid edged even higher during the European morning Thursday, perhaps due to another comment from Turkey that it will deal only with the central Iraqi government for all crude that passes through a Turkish pipeline.

We see the case for oil prices to remain supported for a while more, given that Turkey could follow up its threats and restrict the Kurds from accessing that pipeline. Something like that could eliminate roughly 500,000 barrels/day from the market. In addition, there is also the risk of military conflict, something Erdogan said is on the table on Monday.

- advertisement -

WTI edged north during the European morning Thursday, after it hit support at the 52.00 (S2) line. Then, the price emerged above 52.50 (S1) to stop fractionally below the 53.00 (R1) resistance zone. The price structure on the 4-hour chart continues to suggest a short-term uptrend and as such, we see the possibility for the bulls to remain in the driver’s seat for a while. A break above the 53.00 (R1) hurdle may set the stage for more upside extensions, perhaps towards the 54.00 (R2) territory, marked by the peaks of the 7th of March and 12th of April.

Looking at our short-term momentum studies, we see that both of them support the case for further near-term advances. The RSI turned up and now looks ready to cross above its 70 line, while the MACD, already positive, re-crossed above its trigger line and is now pointing up.

As for the bigger picture, even if WTI continues to trade north for a while, we remain skeptical on whether a healthy long-term uptrend can be established. The price is now trading within the longer-term sideways range, between 51.50 (S3) and 55.30 (R3), where we believe US shale producers may be attracted to increase production. This could put a lid on any future gains.

Previous articleTrade Idea: USD/CAD – Target met and buy at 1.2360
Next articleTrade Idea: EUR/GBP – Sell at 0.8890 or buy at 0.8670
FXGiants is a trade name of 8Safe UK Limited. 8Safe UK Limited is authorized and regulated by the Financial Conduct Authority (FCA No. 585561). High Risk Warning: Our services include products that are traded on margin and carry a risk of losing all your initial deposit. Before deciding on trading on margin products you should consider your investment objectives, risk tolerance and your level of experience on these products. Trading with high leverage level can either be against you or for you. Margin products may not be suitable for everyone and you should ensure that you understand the risks involved. You should be aware of all the risks associated in regards to products that are traded on margin and seek independent financial advice, if necessary. Please read FXGiant's Risk Disclosure statement. FXGiants does not offer its services to residents of certain jurisdictions such as USA, Iran, Cuba, Sudan, Syria and North Korea.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.