WTI oil futures are in a bullish phase and flowing back to the upside, having recouped almost all of the losses made from the decline of the early December high at 58.86 to the December 7 low of 55.79.
A clear break and daily close above 58.40 would open the way for a re-test of the more than two-year high of 59.02. The near-term bias is clearly on the upside and on the 4-hour chart, the market has crossed above the 20 and 50-period moving averages. However, while the RSI is in bullish territory, it is approaching overbought levels at 70. This suggests there could be some consolidation in prices or even a pullback.
The market is currently testing the 58.40 level. Failure to make a sustained move above it soon would lead to a loss in upside momentum and increase the odds of a reversal back to the downside. The key 57 level would be the next major support level, which has held firm in the past few days, despite several tests made. A break below 57 would bring about more bearish momentum to target 56.55 and then the low at 55.79.
In the bigger picture, WTI oil futures have been neutral since peaking at 59.02 on November 24. The medium-term neutral outlook is expected to remain in place with more sideways trading in a broad range between the 56-58 handles.
