Crude Oil extended upside movement on Monday, increasing the price to more than $40.00 a barrel as bulls gain strength. The technical bias remains bullish because of a Higher Low in the recent downside move on the daily chart.
As of this writing, the crude oil is being traded near 40.91. A hurdle may be noted near 42.00, the psychological level ahead of 42.55, the swing high of the last major upside rally as demonstrated in the following daily chart. A break above the 42.55 resistance area will confirm the bullish bias, validating a move towards the 50.00 level.
On the downside, the price is likely to find a support near 38.32, the intraday low of Friday ahead of 36.00, the confluence of last major downside move as well as a major horizontal support as marked in the above chart. The technical bias will remain bullish as long as the 38.32 support area is intact.
US Drilling Falls
U.S. energy firms cut oil rigs for a third week in a row to the lowest level since November 2009, oil services company Baker Hughes Inc said Friday, as energy firms keep slashing spending despite crude futures prices jumping roughly 50 percent since hitting a near 13-year low in February. Drillers cut 8 oil rigs in the week to April 8, bringing the total rig count down to 354, Baker Hughes said in its closely followed report.
Considering the overall technical and fundamental outlook, buying crude oil on dips appears to be a good strategy in short to medium term.