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Middle East Tensions and Slowing US Production Impact Crude Oil

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Ascending triangle pattern

June WTI (West Texas Intermediate) crude futures broke out of the the ascending triangle pattern’s neckline on April 15, 2015. Lately, Middle East tensions and slowing US production are driving oil prices higher. Oil prices gained 21% in April 2015.

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Key pivots

The current momentum could drive oil prices to the next resistance of $66 per barrel. The prices hit this mark in May 2009. Middle East tensions and slowing US production could support the rise in oil prices. In contrast, the increasing output from OPEC (Organization of the Petroleum Exporting Countries) and high inventories will cause oil to test the key support of $52 per barrel. The support is formed from the lows of April 13 and 14.

WTI oil futures settled above their 100-day moving average of $54.28 per barrel on April 23, 2015. The ascending triangle pattern suggests that prices could hit $62 per barrel. In contrast, the RSI (relative strength index) is in overbought territory. Generally, prices fall from these levels.

Higher oil prices are negative for oil refining companies like PBF Energy (PBF), Marathon Petroleum (MPC), and Holly Frontier (HFC). They account for 3.70% of the SPDR Oil and Gas ETF (XOP). They also impact ETFs like the ProShares Ultrashort Bloomberg Crude Oil (SCO) and the VelocityShares 3X Long Crude ETN (UWTI).

For recent updates, visit Market Realist’s Crude Oil ETFs page.

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