Crude Oil Price Takes a Breather After Novak’s Comments

Summary:
• After yesterday's hefty advance, crude oil price has taken a breather after Russia's energy minister appears to play down OPEC+ production cuts.

Crude oil prices took a breather on Thursday after Wednesday’s hefty advance. The crude oil price on the Brent advanced beyond $59 after lessened coronavirus fears allowed traders to make more demand on risky assets such as crude in Wednesday’s trading sessions. 

Crude oil price has cooled off today after Russia’s energy minister Alexander Novak said on Thursday that the situation with the crude oil market was uncertain. He also indicated that the stance of oil producers was not to hold an OPEC+ meeting ahead of schedule. Novak did not comment on whether Russia had acceded to OPEC+ Joint Technical Committee’s demands for deeper production cuts. 

Russia’s non-committal has consistently capped any price advances in Brent crude over the last month and today was no exception. Crude oil price on Brent is now at 59.10, off intraday highs that were posted at 59.69 earlier in the day. 

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Technical Outlook for Brent Crude

Yesterday’s price move was an extension of the last leg of the W pattern after it was able to break the intraday highs of Feb 3, 5 and 6. The move also took it above the 58.69 resistance level. However, today’s candle has to close above the price level as well to confirm the breakout. Presently, today’s bearish candle indicates a pullback which will challenge the 58.69 former resistance, which is now new support in the R-S flip. 

The RSI is close to the midline, which indicates that there may still be room for further upside. If the new support can hold firm and keep the close of the daily candle above it, this will confirm the break of this price level and open the door towards the next upside target at 60.26. 

If the support level fails to hold, the crude oil price will have a good chance of continuing the retreat, in which case this leg to the downside can be considered the bearish conclusion of the “W” harmonic pattern, with today’s high being point D of this XABCD pattern. Confirming this conclusion is the fact that today’s intraday is at the 87.2% Fibonacci retracement from point X to point C.