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Crude oil indicators giving mixed signals ahead of inventory data


Nov. 20 2020, Updated 4:35 p.m. ET

Symmetrical triangle pattern

WTI (West Texas Intermediate) crude oil prices are showing signs of an emerging symmetrical triangle pattern. Prices are trading along key trend lines that are contributing to this pattern. The inventory report due February 25 could be the catalyst needed to break away from this pattern.

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Will WTI crude oil hit $48 per barrel?

The next key trend line point is at $48 per barrel. Prices have hit this mark multiple times since mid-January 2015. On the other hand, bullish traders can watch for resistance at $52 per barrel levels formed from the peaks of February 5, 10, and 19.

In the daily charts, technical indicators including the Relative Strength Index and the Moving Average Convergence Divergence are giving mixed signals about crude oil’s price direction. Yet according to the symmetrical pattern, a downward breakout is possible if crude oil inventory increases more than it’s estimated to. Traders may even anticipate that prices will recover from this level due to possible bottom picking. In that case, crude oil prices could continue their sideways movement.

Lower crude oil prices affect upstream companies including Chevron (CVX), Anadarko Petroleum (APC), Exxon Mobil (XOM), and Occidental Petroleum (OXY). All of these companies are part of the Energy Select Sector SPDR Fund (XLE). Chevron (CVX), Anadarko Petroleum (APC), Exxon Mobil (XOM), and Occidental Petroleum (OXY) make up 13%, 3.2%, 17%, and 3.6% of XLE, respectively.

To learn more about upstream oil companies, visit Market Realist’s Upstream Oil and Gas page.


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