Crude oil futures have continued their bullish momentum once again this week albeit in a measured way, moving ever higher in a series of extended steps, on the daily chart. The start of the year was marked by an extended phase of sideways consolidation around the $94 per barrel region which was clearly defined with isolated pivots both to the upside and to the downside in a narrow range of just under $2 per barrel. The breakout, and move from this level, finally took place on the 17th January which saw the commodity touch an intra day high for the March contract of $96.50 before closing marginally lower at $95.94 per barrel. Yesterday’s trading was characterised by a narrow spread candle with the contract closing at $95.95 per barrel whilst still maintaining bullish sentiment. The only negative aspect for oil this week was the release of the oil stats which confirmed a higher than forecast build in the inventories which came in at 2.8m barrels against 1.9m barrels predicted. Despite this, the outlook for crude oil remains positive and in particular on the daily chart, we have still have rising prices supported by rising volumes which is always a good signal of a validation of the current bullish move. In addition, the three day trend also remains firmly positive, once again supported by sustained buying in this time frame. From a technical perspective the WTI contract is now running into some stiff resistance at the $97 per barrel price region and any break through here will then open the way to a clear and unchallenged route to the $100 per barrel price point. And any firm break and hold here will see a move to re-test the $101.78 high of early September 2012.
By Anna Coulling