• Oil.WTI rises above $50 to hit 6-week high
  • Market may be on the verge of ending bearish sequence
  • 50.40 a key level to watch

We noted that Oil.WTI held up relatively well yesterday despite the largest increase in weekly DOE inventories in 6 months. When a market doesn’t drop on what appears to be negative news, it can reveal an underlying strength behind the price and this may be viewed as a bullish sign. Sure enough today has seen price rally, and even though some of the increase can be attributed to the contract rollover with the new underlying trading 42 cents higher, the market would have gained regardless.

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 Oil.WTI is attempting to end a series of lower highs seen going back to the start of the year. A move above 50.40 would achieve this. Source: xStation

Oil.WTI is now back at the 50.40 level and this could be seen as a pivotal level going forward. Since the start of the year the price has been in a steady downtrend characterised by a series of lower highs and lower lows. The most recent lower high was formed back in July at 50.40 and therefore if price can move above here, the bearish sequence would be negated.

Should price breach this level then 52.00 and 53.80 are possible ahead and even a move to 55.00 – the high from last year – could occur. 

Given the rise seen in oil prices this week it is perhaps a little surprising that currencies that traditionally exhibit a positive correlation with the crude price have failed to move higher. The Canadian dollar and Norwegian Krona are two of the most obvious oil-sensitive currencies and both of these are lower on balance today. USDNOK has in fact enjoyed a fairly strong rise this week, beginning on Monday with some NOK weakness as the Norwegians went to the polls to elect their next prime minister. The pair has now recouped 23.6% of the larger declines after moving above 7.902 and may be heading towards the 38.2% fib retracement at 8.029.

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 USDNOK has been on the rise this week despite the rise seen in the Oil price. Source: xStation