(MENAFN- Daily Forex) WTI Crude Oil is hovering near the significant mark of 40.00 USD per barrel. The price is legitimate psychological barometer in the commodity markets for many traders. A higher price for WTI Crude Oil often signifies that demand by manufacturers is solid and economic conditions are proving capable of achieving growth. If the approximate target of 40.00 USD can be sustained it may be a bullish signal for traders.
The past month of trading saw a swift drop in value of WTI the first week in September, as the price went from highs which were battling resistance near 43.50 USD approximately and then proceeded to fall to support near 36.00 USD. A recovery in value has been seen and support levels have managed to be sustained above 39.00 USD as of this writing.
There are concerns about too much production of Crude Oil in the marketplace having a potentially detrimental effect on the value of the commodity. In recent days Libya has announced it is prepared to export and increase its production again. Libyan crude oil is highly sought because it has a naturally cleaner capacity which requires less refinement by its users. When Libya made the announcement it was used as an excuse by some to explain a sudden dip in the price of WTI, but it is likely the real effect was not significant on the commodity's price the past couple of days.
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What could be holding down the price of WTI Crude Oil at this stage is the sudden risk adverse sentiment which has cascaded through the investment world and hurt equity indices. Yes, there is a correlation between the movement of the equity markets and the price of commodities. WTI remains under its established price range pre-coronavirus and economic conditions are mired with shadows. Some analysts have started to murmur that the US could see a double dip recession develop as knock on circumstances from the economic impact of the pandemic start to take a toll on additional businesses in the coming months. Another stumble in the US would hurt the price of WTI Crude Oil.
WTI Crude Oil continues to look like a reasonable buy using stop limit orders near key support levels. If the commodity falls to the 39.50 USD level it may prove a good opportunity to seek upwards momentum. The fly in the ointment is what happens if the equity markets suffer another dose of negative sentiment which could generate headwinds for Crude Oil.
With negative momentum in mind, if WTI falls below the 38.60 juncture, speculators may want to attempt selling WTI and look for a retest of important support levels targeted below between 37.60 and 36.00 USD. Traders should practice adequate risk management while trading Crude Oil because it has the potential to become turbulent and swift conditions can prove costly if a trader doesn't have proper stop loss ratios working.
If the global market place returns to positive sentiment, WTI could easily trade higher and see a retest of the 43.00 to 44.00 USD levels. Resistance within these higher values has proven strong so traders should also be ready to cash in winning positions and not allow profits to be eaten away because a trade has not been cashed in soon enough due to a downward reversal suddenly developing.
WTI Crude Oil Outlook for October:
Speculative price range for WTI Crude Oil is 36.00 to 44.00 USD.
Support at 38.60 USD looks attractive, but if punctured lower WTI could retest the 37.60 to 36.00 USD junctures if weakness develops.
Resistance at around 42.00 USD looks significant, but if broken the 43.50 USD could be tested.
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