Bullish positions from hedge funds as tracked on the ICE Brent Crude Oil contracts rose to a record level. The bets rose by 4,175 net-long positions to an aggregate of 565,459. The data for the contracts go back to 2011, and the record positions support the view that without a negative shock, the momentum favors price being supported on a probable move higher.
The price charts for Crude oil show a steadily rising trend, and the significant gains of late align with sharp moves to the top of the price channel with relatively small pullbacks.
Recently, the price of WTI Crude (US oil) reached $62, which aligned with the 200% extension off the 2017 low. A pullback from $62 should not be enough to derail the trend, and a look at the 20-day moving average can show you that it has acted as strong support since Q4 17 began.
A hold and reversal higher above the 20-DMA ($58.75/bbl) from here would turn sights back to the 100% extension off the 2016 low at $64.81/bbl. Only a close below $55.83 (early December low) would signal a likely larger pullback and could lead to a test of the October low at $49.10. The current environment has the bullish view in favoured.
The original article was published in Daily FX.
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