Oil prices rose slightly on Monday
Oil prices rose slightly on Monday, with U.S. crude oil prices trading around the $68 price area. Gains were limited by weak Chinese economic data and ongoing demand concerns. Despite easing supply disruptions as Gulf of Mexico oil production resumed after Hurricane Francine, about 20% of oil and 28% of natural gas production remain offline. The market is focused on the U.S. Federal Reserve's interest rate decision, with traders expecting a rate cut, possibly 50 basis points, which could affect oil demand. Chinese industrial output and fuel demand have slowed, increasing bearish sentiment in the oil market. Speculators are also taking short positions in Brent crude as demand fears grow.
On the technical side, the price is testing the support of the 161.8% of the daily Fibonacci retracement level after finding sufficient support on the lower band of the Bollinger bands. The faster moving average (50-days) is trading below the slower (100-days) moving average validating the overall bearish trend in the market while the Stochastic is near the extremely oversold level hinting that there might be a bullish correction in the coming sessions. If this becomes reality then the first area of possible resistance might be seen around the $72 price area which consists of the area just below the 78.6% of the daily Fibonacci retracement as well as the area of price reaction in early and late August.
