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    WTI crude surpasses $60

    Crude oil has resumed its strong recovery since bottoming out in mid-March.  Both Brent and WTI oil prices have rallied in seven out of the past eight weeks, with the latter having now surpassed the psychologically-important price of $60 a barrel. Brent is hovering around the $68 handle. Both oil contracts are thus at their highest levels since early December and on course to make back more of the losses suffered since last summer. The trigger behind today’s rally was apparently news that Saudi Arabia, the world's largest exporter of oil, hiked its prices to customers in Europe and North America. Evidently, the demand for oil has been stronger than expected from these regions. In addition, the dollar has fallen back after staging a minor recovery in recent days; this has boosted some dollar-denominated commodities.

    Crude oil speculators will be watching the latest supply data for further direction. The American Petroleum Institute (API) will publish its inventories report this evening, followed by the more closely-followed Energy Information Admiration (EIA) tomorrow afternoon. So far, we haven’t seen any notable crude destocking despite the sharp falls in the rig counts recently. But judging by the rallying prices of oil, investors expect this trend to end imminently. If seen, this could give rise to renewed buying pressure. 

    WTI has found additional support from its recently-established trend line, which comes in around $58.50/70. As mentioned, the US oil contract has now broken above the psychologically-important $60 level. If it also closes today’s session above here then that would be another bullish outcome. As a result, the bulls may then aim for the next potential target at $61.70; this being the 161.8% Fibonacci extension level of the last significant downswing we saw between February and March. Beyond this level, there is nothing major until $63.75, an old support-turned-resistance level, followed by the 38.2% Fibonacci retracement level of the bear trend from June 2014, at $67.10. The key support levels to watch are shown on the chart in blue, such as $58.35 and $55.75. To get anywhere close to those levels, the bears would first have to tackle the bullish trend line. For as long as WTI remains above this trend line, one would have to assume that the path of least resistance would thus remain to the upside.

    Meanwhile for Brent, the next potential bullish target could be $69.40. As can be seen from the chart, this level marks the 161.8% Fibonacci extension of the last notable downswing from, from point A to B on the chart. Beyond this level is the next psychological hurdle at $70, followed by the 38.2% Fibonacci retracement of the downswing from June 2014, around $72.00.

    Figure 1:

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    Figure 2:

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