WASHINGTON: WTI oil extended recovery rally from last Friday’s spike low at $46.74 and hit session high at $48.40 in early Monday’s bullish acceleration. Oil price accelerated higher on fresh geopolitical instability in the Middle East after unexpected action of Saudi Arabia, The United Arab Emirates, Bahrain and Egypt which severed their diplomatic ties with Qatar, accusing it of supporting terrorism.
Oil price was so far unable to sustain break above $48.00 barrier, as action was capped by falling hourly cloud. However, rising uncertainty over geopolitical situation in the Gulf region would further boost oil price. Additional support comes from long-tailed daily candle left on Friday, which signaled strong downside rejection and failure to clearly break below lower pivot at $46.89 (Fibo 61.8% of $43.74/$51.98 upleg). Extended recovery needs close above $48.74 (Fibo 38.2% of $51.98/$46.74 downleg) to generate stronger reversal signal and open way for further retracement of $51.98/$46.74 downleg., towards a cluster of strong MA barriers between $49.00 and $49.66. Session low at $47.65 marks solid support which is expected to hold dips and keep near-term focus at the upside. Break below here and extension below $47.40 would signal an end of recovery rally from $46.74 and shift near-term focus lower.
