Trade Of The Day: Oil Price Fell On Weak Demand Concerns

Fundamental Analysis

• Warm Winter Chill: Crude oil price saw a modest decline on Monday with anticipated prolonged voluntary output reductions by the OPEC+ coalition through mid-year being offset by challenges in demand. Despite OPEC+ announcement to extend cuts, the ending of mild winter in the Northern Hemisphere which could reduce demand counteracts the impact of the OPEC+ announcement. 

Technical Analysis

• Technical Breakout: Crude oil price was traded lower and broke below the support level 79.50. MACD which indicate ongoing bearish momentum signal with short term bearish market structure suggest the commodity to extend its losses towards the next support level. 

• Resistance and Targets: Should the bullish momentum persist; the price would head towards the subsequent support level 77.90 and potential breaks below the level as well. However, failure to break below accompanied by bullish signal like a bullish engulfing pattern suggest potential rebound for the commodity. 

Get more information on how you can analyse signals using chart patterns and technical analysis.

Potential Risks

As various factors such as demand concerns, OPEC cuts and Middle East, traders remain cautious and reluctant to place aggressive bets on the commodity while continue eying on further developments. 

Read some of the risk management strategies to help you in managing potential trading risks.

Monitoring

Stay updated on news that may potentially impact crude supply and demand such as OPEC, Middle East and any shifts in the US Dollar’s strength by following our daily financial news or market insights articles.

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