Crude Oil: A Key Level to Watch
One of the factors which has been center stage throughout this crisis is the price of crude. High oil prices were initially blamed for the fall of the US stock market. And yet, with oil trading at $52 a barrel, we find the Dow still hovering right around 7900. The question on everyone’s mind… is what happens to the economy if oil should start to go back up?
Oil affects the cost of doing business for almost every company out there - whether they use plastics, or have to ship their product. And it can also affect the movement of many currencies, especially the Japanese Yen (JPY) - since the island nation has extremely limited domestic production - and the Canadian Dollar (CAD), which has the world's second-largest reserves.
So where is the price of this important commodity headed next?
Currently, we are headed down towards a weekly pivot point at 52.17, which is expected to provide some support and potentially bounce us back up to re-test 55.28 as resistance. What happens next will be critical.
If price breaks back above this key level, then we may see a consolidation period between 55.28 and 70.49 (with in-between levels of 58.68 and 63.19 to keep an eye on), depending upon the results of the next OPEC meeting in Cairo.
If instead 55.28 can hold as resistance, we may see further drops - if prices fall below $50, the next support is at 47.30 (with 39.70 and 33.56 below that).
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