Crude oil looks to be bottoming out as the first trade deals come into focus

Over the weekend, Reuters reported that OPEC+ was considering to further speed up oil production hikes as Saudi Arabia signalled it was unwilling to prop up the market any longer amid poor compliance with production quotas from Iraq and Kazakhstan.

The market opened with a big negative gap, but there was no follow through, in fact the market started to slowly fill the gap and eventually we erased all the losses as if that never happened.

There’s been lots of focus on the supply side recently given the OPEC+ moves, but changes on the demand side could start to gather attention. In fact, we are finally getting some details on the first trade deals with the US set to announce a framework for a deal with the UK today.

I’ve laid out a non-consensus opportunity here, and today we might get the first catalyst for a rally depending on the details.

On the 4 hour chart, we can see the negative gap that was eventually filled and the key resistance around the $60.00 level. The buyers will need to break above that resistance to target the $62-64 price area next. The sellers, on the other hand, will likely step in around the resistance with a defined risk above it to position for a drop back into the $55.00 level. This might even turn into a big double bottom, but we will need positive developments on the trade front.

This article was written by Giuseppe Dellamotta at www.forexlive.com.