WTI oil rose on Monday and cracked psychological $40 barrier, hitting the highest in three months after major oil producers agreed to extend a deal on production cuts to the end of July.
OPEC+ group decided on Saturday to extend reduction of nearly 10% of global supply in attempts to stabilize oil market which collapsed on coronavirus lockdown as the measure gave good results in past two months.
China’s crude imports hit an all-time high in May that also underpins price recovery, along with gradual re-start of global economies after pandemic. The contract made an uninterrupted advance in past six weeks and registered the biggest monthly rise in May in nearly nine years. Close above $40 level would generate bullish signal for further advance as bulls look to fill the gap from early March, on close above $41 level that would boost positive signal. Key Fibo barrier at $43.05 (61.8% of $65.63/$6.52) marks next target as stronger bullish acceleration could stretch towards $46.08 (200DMA).
Caution on overbought daily stochastic and RSI (stochastic also formed bearish divergence) that may slow rally. Strong supports lay at $36.27 (the highest after 9 March big gap lower) and $36.08 (broken 50% retracement / rising 10DMA) and expected to contain potential dips and keep bulls intact.
Res: 40.41, 41.04, 43.05, 46.08
Sup: 38.78, 37.95, 36.27, 36.08
