Crude Oil prices
Crude oil price is wavering today as traders refocus on stimulus talks in the United States. The price of Brent is down by 0.43% and is trading at $42.10 while West Texas Intermediate (WTI) is down by 0.62% and is trading at $39.88.
The biggest concern among investors today is whether Democrats and Republicans will reach a stimulus deal in the near term. Yesterday, the talks between Nancy Pelosi and Steve Mnuchin ended without an agreement. On the one hand, Pelosi and Democrats have suggested more than $2.2 billion in spending while the White House has proposed more than $1.5 billion.
According to Reuters, $20 billion of these funds will go to airlines, who are going through their toughest phase on record. Still, even if the two sides reach an agreement, there is no indication that Senate republicans will vote for the deal.
A new stimulus deal is important for crude oil prices because it will help to stimulate demand in the United States.
The price of crude oil is falling today even after the relatively better-than-expected inventories data from the US. Numbers released by the Energy Information Administration (EIA) showed that inventories in the United States declined by more than 1.98 million barrels in the previous week. That was better than the increase of 1.5 million that analysts were expecting.
The daily chart below shows that Brent crude oil price has been moving in a narrow range in the past few weeks. In September, the price reached a low of $39.50, where it found support. Since then, it’s attempt to rally have also found some resistance slightly below the 50% Fibonacci retracement level. Also, the price is along the 25-day weighted and 25-day exponential moving averages.
Therefore, I expect the price will remain at the current range in the next few days as investors weigh the demand and supply dynamics.
