Turmoil in Nigeria, lower shale output in the United States and crisis in Venezuela, all contribute to lower oil supply. These facts support the technical outlook that the oil price remains in uptrend for short to mid-term view. However, analysts believe that the high level of global oil supply prevents the oil price from going too high.
From the technical analysis point of view, we can see that a correction move has occurred into the Fibonacci support area at 48.49-48.01. 20 MA remains above 50 MA on hourly chart but note that the price is testing 50 MA. However, key support is 48.01 and the short-term bias remains bullish as long as the support remains intact. Note that hourly stochastic has crossed up and CCI is oversold. The outlook for crude oil remains bullish for short-term trading.
The trading strategy is to wait for bullish signal confirmation from CCI, to confirm the signal from stochastic within the Fibo’s support area as signal to go long with rebound target at 48.78 and 49.26 in extension. Please be careful if the support at 48.01 breaks instead because it will turn the bias to bearish and possibly will push oil down to 47.67-47.74.