The WTI crude oil price has had one of the most impressive rallies during the COVID-19 pandemic. After briefly turning negative at the start of the pandemic, as the futures settled below zero, the crude oil price had a remarkable comeback.
It reached close to $68 on the back of a stronger than expected economic recovery, coupled with measured taken by OPEC. However, much higher prices are not in OPEC’s interest either, as it would put the US shale industry back on its feet.
Moreover, the threat of a new Iranian deal looms large. If the West lifts its sanctions on Iran, its oil will literally flood the markets. The OPEC and other market players will need to find a way to accommodate the new oil supply, and so the price of oil may suffer in short to medium term.
A double top pattern shows hesitation, not at a specific level but an area. In the crude oil price’s case, that area appears to be the one between $66 and $68. The market struggles to close above, and a new rejection may be decisive. Bears may want to stay on the short side with a stop at $68 and a target below $56.
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