Following the postponement of the scheduled virtual OPEC meeting today, and which is now set for Thursday, it’s an apposite moment to consider both the technical and fundamental picture for oil. And if we start with the daily chart for WTI futures, the week has begun with bullish momentum despite opening gapped down from the close of last week at $28.34 per barrel to currently trade at $27.42 per barrel at the time of writing. Both Thursday and Friday saw oil prices rise strongly on excellent volume following the steep declines of the last few weeks with widespread up candles as the commodity builds a base of support in the $20 per barrel region. These volumes have been the highest on the chart for 2020, giving a strong signal the buyers are back in strength. In addition, the candle of Friday closed above minor resistance in the $25 per barrel and denoted with the red dashed line of the accumulation and distribution indicator which displays the strength of these levels by the thickness of the line.
Moving to the weekly chart, the significant points here are the decline in selling volume during March under a falling market. This is an anomaly as price and volume are in disagreement, and if the market is to fall further, we would expect to see rising volume, not falling and so confirms the weakness in the trend lower. Last week’s wide spread up candle on excellent volume confirms the daily picture. Looking ahead, $35 per barrel is the one key level where the volume on the volume point of control histogram falls away rapidly and therefore once in this area, the price is likely to climb rapidly through this area of no resistance. However, we do have to reach this level and much will depend on any agreement being made on Thursday. The consensus view, and one endorsed by the US President, is that a deal will be agreed and should provide further upside momentum for oil, possibly to this level in the short term.