Crude oil rose to as high as 104.14 last week and the break of 103.74 resistance confirmed resumption of 74.95. Initial bias remains on the upside this week and current rally should head towards 114.83 key resistance next. On the downside, break of 100.84 minor support is needed to signal short term topping. Otherwise, near term outlook will remain bullish even in case of retreat.
In the bigger picture, the medium term up trend from 33.2 shouldn't be completed yet. Rise from 74.95 is indeed tentatively treated as resumption of such rally. Sustained break of 114.83 will target 61.8% projection of 33.2 to 114.83 from 74.95 at 125.40. On the downside, though, break of 95.44 support will indicate that correction pattern from 114.83 is going to extend further with another falling leg to 74.95 and below before completion.
In the long term picture, crude oil is in a long term consolidation pattern from 147.27, with first wave completed at 33.2. The corrective structure of the rise from 33.2 indicates that it's second wave of the consolidation pattern. While it could make another high above 114.83, we'd anticipate strong resistance ahead of 147.24 to bring reversal for the third leg of the consolidation pattern.
WTI crude oil jumped to a 9 month high of 104.14 before ending the week at 103.24. The prompt month contract gained +4.63% during the week as driven by stronger than expected US data and unexpectedly decline in oil inventory. Brent crude oil also soared almost +2.0% although the Greek rescue deal dragged on. Tensions over Iran intensified.
Last week, there was conflicting news about oil exports from Iran to Europe. It was reported that Iran had decided to halt the supply of its crude to Europe before EU sanctions came into effect. However, it was denied by both spokesmen of both parties.
Saeed Jalili, Iran's top nuclear negotiator, wrote a letter last week to the EU's foreign policy head Catherine Ashton to seek negotiations about its nuclear program at the 'earliest possibility'. US' Secretary of State Hillary Clinton and Ashton said they and allies are reviewing the letter to determine next steps.
How the situation evolves remains highly uncertain and military actions from either side cannot be ruled out. This should continue to support oil prices.
Nymex Crude Oil Continuous Contract 4 Hour, Daily, Weekly and Monthly Charts
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